10 Common Car Dealer Fees You Can Avoid

Which car dealership fees should you be avoiding when buying a car, that’s one of the most important things when you are looking to buy a used car or even a new one if you want to save some extra cash.

Sometimes buying a car from a dealership can definitely be a pretty stressful experience and figuring out what fees you should or should not be paying when hammering down a deal with the dealer is definitely one of the more complicated parts of the process.

When an experienced person puts together deals on behalf of his friend, family, or maybe a client it’s not uncommon for a dealer to throw in around half a dozen or more various fees or charges. Figuring out what all these different dealer fees are for and whether you should even be paying for them or not can definitely be pretty complicated.

In this article, We are going to reveal 10 common dealer fees that you can avoid when buying a car.

Dealer Fees And Extras You Should Never Pay when buying a new car

Admin Fees

Admin fees also known as administration or documentation fees are a very common charge that a lot of dealerships will include on a purchase agreement when buying a car. Admin fees can vary anywhere from $299 upwards to $999 depending on the dealership.

The reason the salesperson will give you as to why they need to charge you an admin fee can vary from dealer to dealer. The bottom line though is that this is not a mandatory fee that every single dealership has to charge, and you can find a lot of dealerships out there that don’t have any kind of admin or documentation fee on their deals.

So if you’re buying a car and you see an admin fee on your contract then just ask the dealership to remove it. If they tell you that they can’t remove it because it’s a standard policy or they give you some kind of excuse. Then tell them that you want an additional discount off the price of the car to offset the price of that admin fee.

Etching Fee

Like the admin fees, Etching fees also known as anti-theft fees are a very common charge that a lot of dealerships will try to include on a deal. Dealers can charge anywhere from $199 upwards of $499 depending on what they claim to be offering you.

We’ve seen all kinds of explanations from dealers as to what etching or anti-theft protection is, but the gist of it is that they etch the VIN number of the car onto the glass all the way around the vehicle which serves as the anti-theft deterrent for thieves if the car ever gets stolen and it makes the car easier to retrieve.

We honestly don’t believe that etching does anything at all because number one thieves are always one step ahead. They know that etching exists and they know what to do if they steal a car that has window etching.

And even if etching or anti-theft protection had value there’s no reason to pay upwards of $500 for it from the dealership. You could always just buy your own kit online and do it yourself for around $20 or $30.

So if a dealership tries to sell you on etching or you see it on the contract of the car, just tell the dealership to remove that fee. Again if they tell you that they cannot remove it because the work has already been done or they automatically include included on every single car that they sell, just tell the dealer to give you an additional discount to offset the price of that fee.

environmental Fees

This is a fee that we come across in at least 90% of the deals that you can look at. And it has various different names including an environmental fee, a tire stewardship fee, or a tire tax.

The good thing about this fee is that it usually does not cost a lot of money; most dealerships in our experience will charge anywhere from $20 to 50$ for this fee, but again it’s a fee that you should not be paying because it is not a mandatory charge in most areas.

Some dealerships will tell you that this is a mandatory government charge that has to be paid and they cannot remove it from the deal, but in many areas that is just not the case, there is no such thing as a government environmental levy or tire levy. If they try to sell you on that just tell them you are not paying that fee and to remove it from the contract.

Gap Insurance

Gap insurance is another dealer charge that we often see on a lot of different car deals and dealers can charge upwards of a few hundred dollars for it.

Gap insurance basically is protection against the diminished value and negative equity on a car deal. When you buy a car and it depreciates over time sometimes the value of the car can be lower than what you owe on the car.

Gap insurance is intended to compensate you for that price difference if you were to get into an accident or something were to happen to the car. Although negative equity is definitely a real concern, there are better ways to protect yourself from it when financing a car.

Instead of getting an extended car loan for a seven to eight-year period and getting gap insurance, It makes a lot more sense to pay off the car as quickly as possible and try to get a car loan for a three to five year period at the most so that you can pay off the car and keep the value of the car higher than what you owe on the loan.

Financing Fee

On some deals we prepared, we have seen dealerships charge a standalone financing fee which can be anywhere from $100 to $300. We are not exactly sure why some dealerships charge this financing fee because the majority of car deals do not have any kind of financing fee if you decide to take out a car loan.

In many cases, it’s actually in the best interest of the dealership for you to finance the car, because the dealer is going to be compensated by the lender in the form of a kickback because you took out a car loan with them. That’s why in some cases you will see some used car dealerships that’ll push financing on you even when you want to pay for a car in cash.

If you’re financing a used car and you don’t want to pay any unnecessary financing fees or rely on what the dealership is offering you it’s a good idea to shop around and find your own financing through a bank ahead of time with the lowest interest rate and best offer that you can find.

Delivery Fee

Delivery and destination also known as freight and PDI is a standard charge that you typically see on every single new car deal. Delivery fees can range anywhere from $1,500 upwards to $2,200 depending on the new car that you’re purchasing.

It’s important to understand that delivery fees are a standard mandatory charge that does come on the majority of new cars with a few small exceptions. There are situations, however, where you should not be paying any kind of delivery or freight and PDI fee and this applies to demo cars and used cars.

Both demos and used cars have already absorbed the delivery and destination fee so there’s no reason that you should be paying for them a second time around when you are buying that car.

So if you’re buying say a lightly used demo car from a new car dealership and you see that they’re trying to charge you a delivery and destination fee tell the dealership that you want that fee removed from the deal.

Nitrogen Fee

This is one of our favorite fees that we see on a lot of new car deals because it will just make you laugh at how ridiculous it really is. Nitrogen fees also sometimes called nitro packages are when the dealer inflates the tires of the car with 100% nitrogen air.

The supposed claimed benefit of this is that it helps maintain the same consistent tire pressure in your car’s tires even when you have huge temperature changes in the weather.

We honestly don’t buy that argument at all because regular air is already almost 80% nitrogen, so we are not really sure what you’re getting by adding just a little bit more nitrogen in your tires.

We have seen some dealerships charge upwards of $600 for nitrogen packages which is absolutely ridiculous. So if you see that fee on a dealer contract make sure you tell the dealership to remove it.

Wheel Locks

Wheel locks are very common on a lot of new car deals and dealers can charge upwards of $150 for them on the vehicle contract. They basically act as a small theft of turns giving you a lockable nut on each one of your wheels and helping to prevent wheel theft.

We honestly don’t believe it’s worth it to pay upwards of $150 for wheel locks for most regular cars. Because number one wheels don’t often get stolen on cars so the risk is very low. And number two wheel locks can be a total pain in the neck for both dealers and mechanics whenever you need to do wheel changes.

It’s very common for the key to wheel locks to go missing if you don’t store it in a safe place, and if that happens taking the wheels off the car becomes a total pain in the neck. It’s honestly just one more thing to worry about and we would rather not have them at all. Especially for a regular car with just normal wheels.

So if the dealership is trying to sell you on wheel locks and you see them on the purchase agreement for the car just tell the dealership no thanks. If you decided that you see value in having wheel locks, especially for higher-end cars with more expensive wheels you could always buy a wheel lock kit yourself for only forty or fifty dollars.

Certification Fee

Certification or Inspection fees are common fees that we see on a lot of used car deals and we have seen some dealers charge upwards of 899$ for them.

When asked what this is many dealers will tell you that this is a fee to recondition the car to sell it to you in a safe condition. Actually, the cost of reconditioning and safetying a car should already be included in the car’s asking price. It means if you are buying a used car you want to know that it’s already in a safe condition and you really shouldn’t have to be paying extra for that.

In many locations used cars already need to be safetied and reconditioned in order to be sold, So all the cost of that should already be included in the advertised price.

So if you’re buying any kind of a used car and the dealership is advertising the car is already safetied or certified but then they go and try and charge you any kind of a reconditioning or certification fee later on just tell the dealership that you are not paying that and you want all that to already be included in the price.

Protection Fee

The term protection fee alone is pretty vague but this can include a number of different things depending on the dealership in the car and we have seen all kinds of various forms of protection charges that have been added to car deals.

Some of the most common types of protection charges on car deals include Key Fob Protection, wheel and tire protection, and interior or exterior paint protection.

Depending on what the level of protection is or what the dealership claims to be offering you it’s not common for some of these packages to cost upwards of a thousand dollars or more depending on the car and the dealer.

Without doing any research or knowing more about these products we would not recommend spending over a thousand dollars on any of them instead tell the dealership that you would like to go home. Do some research and instead make an informed decision later on.

Conclusion

We have definitely seen some car buyers buy some of these protection fees including wheel and tire protection or key fob protection and then got no value out of it because they never made use of it during their ownership period. So it’s important that you do your own research on a lot of these protection products to determine whether they’re going to have value to you whether you’re going to make use of it and then make an informed decision later on.

These 10 dealer fees that we went through are definitely not the only type of dealer fees that can exist out there and it’s definitely possible for some dealerships to come up with other types of fees and charges. However, these are the 10 most common fees that you’re likely to encounter when buying a new car or a used car from a dealership. So if you would come across any of these fees now you’re going to know what to do.