Buying a car can be both stressful and expensive. Especially, when you consider dealer fees and add-ons that can quickly turn a $25,000 car into a $35,000 nightmare.
The good news? Many of these costs aren’t necessary and are often negotiable. In this article, I’ll break down which fees are worth paying and which you can avoid, so you can keep more of your hard-earned cash.
Stick with me until the end, and I’ll also reveal a popular fee that’s legally capped in many states—something you definitely don’t want to miss.
Now, let’s dive in and make sure you get the best deal on your next car!
Top 13 Dealer Fees & Add-Ons
But before we dive into the dealer fees and add-ons, I want to tell you really quick about some state fees you can’t avoid when buying a car. They include state taxes, tags, and registration fees.
These are non-negotiable and always must be paid buy the purchaser. So when you see this on your purchase agreement, don’t be alarmed. They’re mandatory.
Now let’s get into top 13 fees you will face at the car dealer.
1. Dealer Prep Fees
What are they? Dealer prep fees are charged for preparing the car for sale. This includes things like checking the tires and fluids, fueling the car, removing the shipping stickers and protective coverings, and giving the vehicle a quick wash.
Should you Pay for It? NO!
Most manufacturers already compensate dealers for prepping new cars.
2. Advertising Fees
What are they? Advertising Fees are meant to cover their local marketing and advertising costs.
Should you Pay for It? NO!
This charge is included in the dealer’s operating expenses and should already be factored into the car’s price.
3. VIN Etching
What is it? Dealers sometimes charge to etch the Vehicle Identification Number (VIN) onto the car’s windows to deter theft.
Should you Pay for It? NO!
VIN etching is often overpriced at dealerships, and you can easily do this yourself for a fraction of the cost or avoid it entirely.
4. Extended Warranty
What are they? Extended warranties warranty the vehicle longer than the included manufacturer’s warranty.
Should you Pay for It? NO!
While extended warranties can be useful in some cases, especially if you don’t buy a good car to begin with, they’re marked up considerably at the dealership and rarely get used.
If you want the peace of mind that an extended warranty brings, I suggest you shop around for third-party warranties or better yet, pick a more reliable car.
5. Fabric Protection & Paint Protection Programs
What are they? These programs provide treatments to protect the car’s interior or exterior from damage.
Should you Pay for It? NO!
Like most add-ons, they are usually way overpriced at the dealership. If you feel like you must have them, perhaps you have small children who like to eat in back seat, Feel free to shop prices with your car insurance and other local repair shops.
6. Nitrogen in Tires
What is it? Filling your tires with nitrogen instead of air. Dealers claim it improves tire performance.
Should you Pay for It? NO!
While nitrogen can have some minor benefits, it’s not worth it. Standard air is more than sufficient for most drivers.
7. Market Adjustment Fees
What are they? If the car you’re purchasing is in high demand, dealers may try to add this fee on top of the MSRP.
Now, if we could only get them to lower the prices automatically for cars that are over priced or don’t sell well. That will be the day.
Should you Pay for It? NO!
This is essentially an extra charge to take advantage of high demand of certain models. Before trying to negotiate these fees, be sure to look at other dealerships for the car you want. They may not charge these fees at all.
8. Window Tinting
What it is: Some dealers add window tinting to cars and charge for it.
Should you Pay for It? NO!
Like VIN etching or protection packages, this service is usually marked up quite a bit. You can get tinting done at a specialized car shop for much less.
9. Destination Fees (if inflated)
What is it? These fees cover the cost of transporting the car from the manufacturer to the dealership.
Should you Pay for It? NO!
While manufacturers charge a destination fee, some dealers inflate it. Ensure that the fee matches what’s listed on the manufacturer’s website and isn’t overly marked up.
10. Dealer Add-ons (Unnecessary Extras)
What is it? Some dealers will pre-install things like floor mats, door edge guards, or cargo nets and charge you for them.
Why you shouldn’t pay: These items are often overpriced. You can buy similar accessories from aftermarket retailers at a lower cost. Ask the dealer ofr a vehicle that does not have these “upgrades”.
11. Loan Origination Fees
What is it? Some dealerships add fees for arranging financing through their in-house services.
Should you Pay for It? NO!
There’s no need to pay extra for this service. You can often secure financing from a bank or credit union on your own who doesn’t charge this fee.
12. Service Plans
What is It? Service plans normally cover scheduled maintenance, such as oil changes and tire rotations, that are typically included in the owner’s manual.
Should you Pay for It? Maybe
Service plans can be a good thing if they are priced right. They might even save you some money and time. However, initially, the dealer will have the price marked up too high so expect to negotiate down to an amount that makes the most sense for you.
There is one thing to watch with service plans. With service plans, be sure to ask the dealer where the services must be performed. Many dealerships require you to go to the dealership where you purchased the vehicle. And of course, if you move, that can create quite the problem.
13. Document Fees
Finally, the most common dealer fee that is negotiable is the One fee that’s preprinted on the contract, and the salesman will be sure to tell you it’s non-negotiable.
It’s the “documentation fee” or “doc fee”.
Typically, document fees will be listed anywhere from $100 to $900. This fee varies widely depending on state laws and which dealer you’re purchasing the vehicle at. To better control doc fees, many states cap what a car dealer can charge for the doc fee. However, in some states, dealers can charge whatever they choose.
Here are some doc fee examples
- California caps doc fees at $85
- Florida has highest fees in the nation, often around $600 to $900
- New York caps the fee at $175
- Texas often sees fees between $150 and $300
So what is the Document fee?
It usually covers administrative costs for preparing and processing the paperwork related to the sale, such as title and registration.
Should You Pay It? Yes and No.
While a dealership might not remove the document fee from the purchase agreement, they can offset the cost of the document fee by offering you a discount on the sales price of the vehicle.
So for example, if the document fee is $500, ask them to take $500 off the price of the car instead of removing the document fee.
Congratulations! You just finished negotiating the price of your next vehicle.
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