Dealer Fees to Watch Out For When Buying a Car | LendingTree (2024)

Whether you buy a new or used car, the purchase is going to come with a few dealer fees attached. The good news is that many of these fees are negotiable. Keep reading to learn more about what fees you can expect and which ones can be negotiated during the car-buying process.

You can typically expect to pay 8% to 10% of the car’s price in fees. There are required fees, including those payable to your local or state government, and then there are add-ons that you may or may not need to pay depending on your situation.

How much are dealer fees on a used car?

While the total cost of dealer fees varies when you’re buying a used car, there are generally fewer fees to worry about. For example, you won’t have to pay a destination fee if you’re buying pre-owned. Still, there are some fees you can’t get around. We’ve listed some common ones here for your review.

  • Tax, title and license fees: These fees are generally regulated by your state government, so they can’t be negotiated. Rates vary based on the state in which you purchase and register your vehicle. You’ll have to pay them each time a car changes hands.
  • Documentation fee: If the dealer pulls paperwork together for your transaction, there’s a good chance you’ll be charged a documentation fee.
  • Reconditioning fee: Dealers inspect used cars for any maintenance or appearance issues before reselling them. They may try and pass this cost on to you through a reconditioning fee.
  • Extended warranty: If you choose the dealer’s extended warranty on top of the manufacturer’s warranty, expect the cost to be added to your bill.

Dealer Fees to Watch Out For When Buying a Car | LendingTree (1) Learn more about how to buy a car and how to finance a used car.

Some dealer fees can’t be avoided. Here’s a look at the fees that you typically have to pay when buying a car.

Documentation fee

Also known as a “doc fee,” this charge covers the cost of preparing and filing all the paperwork, including the sales contract and car registration. Each state sets its own standards for what dealers can charge.

Destination charge

If you’re buying a new car, expect to pay the destination or freight charge to cover its transportation from the manufacturer to the dealer. You’ll pay the same cost (by make and model) regardless of whether you buy your car 1,000 miles away from the assembly line or pick it up from the factory floor.

Inspection and emission fee

In many states, a vehicle must pass a state safety and emissions inspection before it can be sold — then, dealerships pass that cost on to you. Prices vary by state and provider, but they’re typically inexpensive.

Tax, title and license fees

Once a car is yours, it needs to be registered with your local government. Dealerships handle much of the process on your behalf, and the rules vary by state. You’ll typically need to pay sales tax, a title fee and a licensing fee, but additional fees may apply depending on your state of residence.

Dealer Fees to Watch Out For When Buying a Car | LendingTree (2) Learn more about how much it costs to own a car.

Dealer fees you can negotiate

Unlike the fees we described above, the following fees aren’t required and may be negotiable.

Market adjustment

Some dealers charge “market adjustments,” or fees over the manufacturer’s suggested retail price (MSRP) when the market demand for a particular car is high. These fees aren’t regulated and are completely negotiable.

GAP insurance

Guaranteed asset protection (GAP) covers the “gap” between what your car is worth and what you owe if your car is totaled. You probably don’t need it if you make a down payment — but if you don’t make one, GAP could be useful. The dealer isn’t your only option for this type of insurance: Many auto insurance providers also offer GAP. Shop around before accepting an offer.

Loan protection insurance

If you were suddenly unable to make your car payments because you lost your job or became sick, loan protection insurance would pay off the remainder of your loan balance — even in the event of your death. Like GAP insurance, you could look to your own bank or credit union — don’t feel pressured to buy through the dealer.

Extended warranty

A vehicle service contract, or extended car warranty, takes over when the manufacturer’s warranty runs out. Dealers sell them but typically they aren’t the companies that back them. Make sure the company behind the extended warranty is reputable, and read the fine print to see exactly what type of labor and parts are covered and for how long.

Tire-and-wheel protection

A tire-and-wheel warranty pays to patch, fix or replace your vehicle’s tires or wheels if they are damaged from road hazards like nails, broken glass, a pothole or tree limbs. If your biggest fix over several years is a simple plug for a one-time flat, it may not be worth the price of the policy.

Appearance protection packages

Appearance protection packages protect the paint and interior of your car from cosmetic damage, all at a hefty markup. If you want to save money, you can forego these types of upgrades or pay a local auto shop to service these elements.

Some vehicles may come with an appearance package as standard. In these cases, removing it is not possible.

VIN etching

Dealers may charge for etching your car’s vehicle identification number (VIN) onto the windows to protect against theft. Etching the VIN on the windshield and other places can make it more difficult for thieves to resell your car or sell off the parts. However, this is something you can easily take care of yourself, through your local police department or a car club like AAA.

Anti-theft devices

Systems like OnStar and LoJack can track a vehicle’s location in case of theft. Dealers may offer these services as an upgrade, while others automatically add them to cars for sale. Consider whether they’re worth the cost before you go car shopping.

Dealer Fees to Watch Out For When Buying a Car | LendingTree (3)

Some fees come down to your personal preferences and appetite for risk. An alternative to buying protection products is to keep an emergency fund for unexpected expenses; this way, the money stays in your pocket, not the dealer’s. If you’re unsure about a certain fee, ask about it before you sign. Once you finish the paperwork and drive off, it could be considered a done deal.

Dealership fees can add up to 8% to 10% of a car’s price; however, not all of these fees stay in the dealer’s wallet. They include any applicable taxes, registration charges and other fees required by law.

Yes and no. Fees charged by your state or local government are mandatory, and they can’t be disputed. Fees charged by dealers are allowed by law but must be uniform. They cannot charge one fee for one customer and a completely different fee for another. You could ask a dealer to reduce the price of the vehicle by whatever amount the fee costs.

For example, if the dealer documentation fee is $800, you could ask the dealer to reduce the car price by $800. Of course, there’s no guarantee that the dealer will agree to the price reduction.

Unfortunately, the destination fee is mandatory and cannot be negotiated. However, the good news is that this fee will remain the same whether you’re flying the car across the country or simply picking it up from the lot.

To determine what you should pay for a new car, look up the car’s value in an industry guide. NADAguides, Kelley Blue Book and Edmunds are all completely free for consumers to use. Dealer prices may be higher or lower, but we recommend not paying more than the guidebook value — here’s more on how to value a car.

Dealer Fees to Watch Out For When Buying a Car | LendingTree (2024)

FAQs

How much are most dealer fees? ›

How much are dealer fees? You can typically expect to pay 8% to 10% of the car's price in fees. There are required fees, including those payable to your local or state government, and then there are add-ons that you may or may not need to pay depending on your situation.

Are documentation fees negotiable? ›

Doc fees aren't generally negotiable, though some dealerships may be willing to haggle under certain circumstances. What is negotiable, however, is the sticker price. If you know to expect a doc fee on top of the ordinary sales value, you can try to knock off a couple hundred dollars to account for the added cost.

Is it normal for dealers to charge over MSRP? ›

During periods of high demand and limited supply, it's not uncommon to find dealerships that charge over the Manufacturer's Suggested Retail Price (MSRP). Contributing factors include production constraints, increased shipping costs, and a global semiconductor shortage that has disrupted the auto industry worldwide.

What are the taxes and fees when buying a car in New Jersey? ›

New Jersey assesses a 6.625% sales tax on the purchase price of any used or new car or other vehicle. The amount of sales tax you'll owe is calculated by multiplying a car's price by 0.06625.

What are dealer manager fees? ›

The dealer manager's compensation usually consists of selling commissions (e.g., seven percent of gross proceeds from the securities sold in the offering) and the dealer manager fee (e.g., two or three percent of the selling price of each sold security).

Why do dealerships charge so much? ›

If your car needs some repairs, you might wonder why the dealership charges so much more than a regular repair shop. There are a few reasons for this. First of all, dealerships have to make a profit from their work. They also have to pay for things like advertising and employee salaries.

How much can you negotiate on a new car? ›

The Manufacturer's Suggested Retail Price (MSRP) is the starting point for negotiation, but it's not necessarily the final word. In general, you should aim to pay no more than 10% below MSRP for a new car. However, this number can vary depending on the car you're interested in and current market conditions.

Are documentation fees legitimate? ›

Doc fee. Doc fees straddle the line of legitimate and illegitimate. Know that you can and should negotiate the doc fee with a car dealer. Also know that the dealer will never actually remove the fee from your buyer's order, instead they will reduce the selling price of the vehicle by the same amount as the doc fee.

How do you negotiate fees? ›

How can you negotiate fees more effectively with clients?
  1. Know your worth. Be the first to add your personal experience.
  2. Understand the client's needs. Be the first to add your personal experience.
  3. Offer options and flexibility. ...
  4. Be prepared to walk away. ...
  5. Practice and improve. ...
  6. Here's what else to consider.
Sep 25, 2023

How to not pay dealer markup? ›

How To Avoid Paying High Dealer Markups And Get The Best Deal On Your New Car
  1. Do your research.
  2. Know the invoice price.
  3. Get quotes from multiple dealerships.
  4. Avoid dealer-added accessories.
  5. Look for manufacturer incentives.
  6. Negotiate a discount.
  7. Pay attention to dealer fees.
  8. Get the price in writing.

Is charging more than MSRP illegal? ›

While there are no specific laws in the California Vehicle Code that prohibit dealerships from selling vehicles above MSRP, they must comply with advertising and disclosure laws and cannot engage in unfair or deceptive practices.

Can dealers come down on MSRP? ›

A car's MSRP is not the lowest price a dealer can accept, and you can use it as a starting point for negotiations. With that in mind, it's important to do some research to figure out the car's value. You can find this information by visiting industry resources, such as Kelley Blue Book, NADAguides or Edmunds.

How much are dealer fees in NJ? ›

List of dealer car-buying fees by state
StateMaximum sales tax1Median doc fee6
New Jersey8.63%$499
New Mexico4%$339
New York8.88%$75
North Carolina3%$699
48 more rows
Nov 13, 2013

Is there a cap on doc fee in NJ? ›

A doc (documentation) fee covers the cost of completing paperwork related to the purchasing/leasing of a new vehicle. Our documentation fee, $749, is one of the lowest in the state. Buyer Beware: There is no cap to the documentation fee in the state of New Jersey, so other dealerships can charge any number they want.

How much are title and registration fees in NJ? ›

Registering one that is older than two years is $46.50. A car model within two years is $59. The fees for registering other types of vehicles are higher. To transfer the title of a car is $60 (or $85 with a lien).

What is the maximum doc fee in NC? ›

Dealerships will charge you this fee when you purchase a vehicle from them to cover the costs of preparing and filing sales documents. State law doesn't place any limits on these fees, so they vary from place to place. North Carolina car buyers pay an average of $550 in doc fees.

What is the maximum doc fee in California? ›

The following rules apply when collecting fees from buyers: If a dealer has a contractual agreement with DMV to be a private industry partner pursuant to Section 1685, the document processing charge shall not exceed eighty-five dollars ($85).

What is the maximum doc fee in PA? ›

On January 12, 2023, the maximum allowable documentary fee increased to $374 for processing title work manually and $449 for processing title work online.

What is the doc fee law in Indiana? ›

Code § 9-32-13-7. Section 9-32-13-7 - Document preparation fees (a) Except as provided in subsection (b), it is an unfair practice for a dealer to charge a document preparation fee in excess of two hundred dollars ($200).

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