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Dealer Charges

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What Are Dealer Charges?

Dealer charges are extra fees the car dealer requires you to pay when purchasing a new or used vehicle. These fees are added to the sticker price or price the dealer quoted you. As such, it changes the final amount you pay for it.

Deeper Definition

After doing your due diligence and finally deciding on which car to buy, you head to the dealership to make the purchase, only to see that the price on the sales contract is higher than the sticker price – the extra surprise fees are dealer charges.

These charges vary. There are those required by the state and those that offer additional benefits to the vehicle. Being able to distinguish which is compulsory from which is a nice-to-have, you can negotiate your way out of some of the charges.

Some states require that you pay sales tax on any material purchase you make. If you reside in such a state, the car dealership would add the tax fee to your final purchase price. Fees such as this one are not negotiable. On the other hand, having your vehicle’s VIN etched into your windshield for extra security against theft is not compulsory. Also, having it washed before you drive off the lot is not necessary.

Here are dealership fees you are likely to come across:

  • Preparation Fee: A dealership charges an extra fee to help get your vehicle ready before you drive off the lot. It typically includes washing the car and checking the fluids.
  • Extended warranties: This offers you the option of protecting your vehicle beyond the manufacturer’s set limits.
  • Registration Fee: This is a fee levied by the state, and there is no way to escape it as all vehicles must be registered. The dealership takes care of the registration, so you won’t wait in line at the DMV to do it yourself.
  • Destination Fees: This fee covers the amount a manufacturer charges the dealer to ship a new car onto their lot. There is no getting around it.

Dealer Charges Example

Mike buys a new car for $20,000. The dealer charges a preparation fee of $400 and Mike decides to buy an extended warranty for $1500. The state of Indiana charges a registration fee of $197. Mike is charged destination fees of $1000, bringing the total cost of the new car to $23,097.

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