Car Buying 101: Avoiding Hidden Fees

Buying a car should be an exciting experience, but not an unnecessarily expensive one. Sure, there is the cost of the car to consider, but you should also beware of hidden fees that could bump up your total spend considerably. In this article, we’ll explore some of the most common hidden costs when purchasing a car and what you can do to avoid them.

Buying a car should be an exciting experience, but not an unnecessarily expensive one. Sure, there is the cost of the car to consider, but you should also beware of hidden fees that could bump up your total spend considerably. In this article, we’ll explore some of the most common hidden, additional and unnecessary costs when purchasing a car and what you can do to avoid them.

Conveyance or Documentation Charges

Did you know that some car dealerships may charge between 1 and 3 percent of the vehicle’s costs to cover documentation and conveyance charges? Seems a high price to pay for what is effectively just a lot of paperwork, doesn’t it? While you might not be able to avoid these fees completely, you might like to offset the costs by asking for a discount, a car with additional features or some dealer-installed accessories. How about those fancy embroidered car mats?

Advertising Fees

Should you really pay for a dealership’s advertising costs? Well, a lot of dealerships seem to think so! It is quite common for dealers to add a few hundred dollars extra to the cost of a car in order to recoup some of the costs of their regional and national advertising campaigns. You do not have to pay these fees on top of the invoice price. Just say no if your dealer suggests this.

Preparation and Delivery Fees

Some dealers will include a second sticker on the vehicle’s window listing additional charges such as “dealer prep”, “vehicle prep”, “pre-delivery inspection” or “vehicle procurement”. The good news is that you can contest any of these charges. No matter what name they go by, they should be included in the mandatory destination charge, which should also include a full tank of gas.

Loan Payment Fees

Most auto manufacturers offer loans directly to their customers, and many customers are surprised to find hidden fees attached to their loan. For example, setup fees and customer service fees may be added to the full cost of the loan. Before you enter into any loan agreement, make sure you have a full understanding of the payment terms. Check with your own bank as they may be offering much better loan products with lower interest and no fees.

Unnecessary Add-Ons

Although add-ons are not technically hidden fees, savvy car buyers may want to avoid unnecessary features and services to keep costs down. Here are some examples:

Extended Warranty

Sure, it sounds great to have a warranty in place that covers any repairs after the manufacturer’s warranty expires. However, extended warranties can often add thousands of dollars to the invoice price of the vehicle. Instead, buy a reliable vehicle in the first place and set aside an emergency repair fund.

VIN Etching

Vehicle Identification Number (VIN) etching is a great anti-theft measure, but you don’t have to pay over the odds to have this procedure carried out on your vehicle. Many local mechanics will carry out this service for you and for a fraction of the cost you’ll pay at a car dealership. In fact, you can also purchase a DIY kit for as little as $20.

Disability and Life Insurance

When you buy a car from a dealership with an auto loan, you may be offered life and disability insurance, but you certainly don’t need to take them out. They are designed to help you to pay for your vehicle if you die early or cannot work because you are injured. However, cheaper coverage is most certainly always available through your primary car, home or life insurance company.

Paint Sealing, Rustproofing and Fabric Stain Protection

Today’s vehicles are made to withstand all that life has to throw at them, including corrosive road and weather conditions. If your dealer suggests you invest in rustproofing, paint sealing or any other additional treatment, just say no. Interior fabric protection is simply a spray-on fabric protectant, while paint sealants are usually nothing more than wax that will wear off after a few months.

Car Insurance

If you are purchasing a vehicle with a higher spec or your existing car insurance is just about to expire, a car dealer may insist that they can get you a great deal on a new policy. Car insurance is one of the most expensive aspects of driving a car and so the cost shouldn’t be taken lightly. Many dealerships are paid a commission on any car insurance policy that manages to sell to customers, and guess who pays that commission. That’s right, you!

By doing your research before you purchase a vehicle and gathering a few quotes, you can be armed with the facts before you approach a dealer and tell them you have already found a cheaper deal.

Hidden Fees? Leave ‘Em in the Dust

Buying a new car and worried you’ll fall victim to the hard sell or miss hidden fees in the small print? You don’t need to be a math whiz to spot the unnecessary charges. Just make sure that you work with a dealer you can trust and who won’t saddle you with unnecessary fees for their own benefit. Read the fine print, ask questions about the cost of the vehicle and steer clear if you are not comfortable about any aspect of the sale.

and what you can do to avoid them.

Conveyance or Documentation Charges

Did you know that some car dealerships may charge between 1 and 3 percent of the vehicle’s costs to cover documentation and conveyance charges? Seems a high price to pay for what is effectively just a lot of paperwork, doesn’t it? While you might not be able to avoid these fees completely, you might like to offset the costs by asking for a discount, a car with additional features or some dealer-installed accessories. How about those fancy embroidered car mats?

Advertising Fees

Should you really pay for a dealership’s advertising costs? Well, a lot of dealerships seem to think so! It is quite common for dealers to add a few hundred dollars extra to the cost of a car in order to recoup some of the costs of their regional and national advertising campaigns. You do not have to pay these fees on top of the invoice price. Just say no if your dealer suggests this.

Preparation and Delivery Fees

Some dealers will include a second sticker on the vehicle’s window listing additional charges such as “dealer prep”, “vehicle prep”, “pre-delivery inspection” or “vehicle procurement”. The good news is that you can contest any of these charges. No matter what name they go by, they should be included in the mandatory destination charge, which should also include a full tank of gas.

Loan Payment Fees

Most auto manufacturers offer loans directly to their customers, and many customers are surprised to find hidden fees attached to their loan. For example, setup fees and customer service fees may be added to the full cost of the loan. Before you enter into any loan agreement, make sure you have a full understanding of the payment terms. Check with your own bank as they may be offering much better loan products with lower interest and no fees.

Unnecessary Add-Ons

Although add-ons are not technically hidden fees, savvy car buyers may want to avoid unnecessary features and services to keep costs down. Here are some examples:

Extended Warranty

Sure, it sounds great to have a warranty in place that covers any repairs after the manufacturer’s warranty expires. However, extended warranties can often add thousands of dollars to the invoice price of the vehicle. Instead, buy a reliable vehicle in the first place and set aside an emergency repair fund.

VIN Etching

Vehicle Identification Number (VIN) etching is a great anti-theft measure, but you don’t have to pay over the odds to have this procedure carried out on your vehicle. Many local mechanics will carry out this service for you and for a fraction of the cost you’ll pay at a car dealership. In fact, you can also purchase a DIY kit for as little as $20.

Disability and Life Insurance

When you buy a car from a dealership with an auto loan, you may be offered life and disability insurance, but you certainly don’t need to take them out. They are designed to help you to pay for your vehicle if you die early or cannot work because you are injured. However, cheaper coverage is most certainly always available through your primary car, home or life insurance company.

Paint Sealing, Rustproofing and Fabric Stain Protection

Today’s vehicles are made to withstand all that life has to throw at them, including corrosive road and weather conditions. If your dealer suggests you invest in rustproofing, paint sealing or any other additional treatment, just say no. Interior fabric protection is simply a spray-on fabric protectant, while paint sealants are usually nothing more than wax that will wear off after a few months.

Car Insurance

If you are purchasing a vehicle with a higher spec or your existing car insurance is just about to expire, a car dealer may insist that they can get you a great deal on a new policy. Car insurance is one of the most expensive aspects of driving a car and so the cost shouldn’t be taken lightly. Many dealerships are paid a commission on any car insurance policy that manages to sell to customers, and guess who pays that commission. That’s right, you!

By doing your research before you purchase a vehicle and gathering a few quotes, you can be armed with the facts before you approach a dealer and tell them you have already found a cheaper deal.

Hidden Fees? Leave ‘Em in the Dust

Buying a new car and worried you’ll fall victim to the hard sell or miss hidden fees in the small print? You don’t need to be a math whiz to spot the unnecessary charges. Just make sure that you work with a dealer you can trust and who won’t saddle you with unnecessary fees for their own benefit. Read the fine print, ask questions about the cost of the vehicle and steer clear if you are not comfortable about any aspect of the sale.

Leave a Reply

Your email address will not be published. Required fields are marked *