Your membership has expired

The payment for your account couldn't be processed or you've canceled your account with us.

Re-activate

    How to Avoid Car Buying Fees

    Watch your step to prevent paying more than you should for a new car

    Photo illustration of car with lots of price tags. Photo Illustration: Lacey Browne/Consumer Reports, Getty Images

    Purchasing a new car is stressful enough, so it helps to go into a showroom knowing which of the charges that show up on your bill are unavoidable, which can be negotiated, and which you can skip altogether.

    More on Car Buying

    And remember: You have the power to walk out and shop somewhere else. That’s what CR member Ron Martinson of Falls Church, Va., says he did: “I told [the salesperson] that he got one chance to give me his final/best offer, and that there would be no ‘add-ons’ except for government charges/taxes. He lost the deal.”

    Government charges can include state sales tax (usually calculated based on the difference between the price of the new car and, if you have one, the value of your trade-in) as well as the cost of establishing the title and registration in your name. Another unavoidable fee is the destination charge, or what the automaker charges for delivering the vehicle from the factory to the dealership; it’s included in the official window sticker.

    But you can often avoid other fees or negotiate them down. And check the laws in your state: Some cap the fees that dealers can charge.

    Legitimate Costs

    Documentation or Conveyance Charges
    Though it’s reasonable for you to have to cover the cost of your title and registration (typically 1 to 3 percent of the vehicle’s cost), dealers often charge extra—sometimes hundreds more—for processing these and other documents.

    The fix: You might not be able to avoid this fee entirely, but you can try for a discount or ask for something in return, such as dealer-installed accessories like winter floor mats.

    Registration Charges
    You have to register your car in order to drive it, no matter where you live. While you can take care of registering your new vehicle on your own, it’s more convenient to have the dealer take care of it for you. But this creates an opportunity for the dealer to pad the bill a bit.

    The fix: Before going to the dealer to finalize the deal, check the department of motor vehicles website for your state to find out the costs associated with registering a new car. Then have the salesperson or the business manager who is handling the paperwork itemize all the registration costs, and make sure they are the same as what you found online.

    The dealer may add a fee for the convenience of doing this work for you, and you’ll have to decide whether you want to contest it or if it’s worth paying.

    Sales Tax
    Almost every state requires you to pay sales tax on your new vehicle. So unless you’re in one of those few that don’t charge it, you will have to pay up when buying.

    The fix: In some states you can deduct the value of your trade-in vehicle from the purchase price, which will lower the tax you end up paying. Applying available rebates and incentives can also do this. Research in advance whether your state applies sales tax to the net (post-trade-in or post-incentives) or the gross cost (the negotiated price of the car).

    Fees You Should Contest

    Advertising Fee
    Dealers sometimes add an extra few hundred dollars to recoup the cost of national and regional advertising campaigns.

    The fix: If the dealer says he will sell a car at the invoice price but you have to pay an advertising fee, just say no. The cost of advertising the car is baked into the sticker price.

    Delivery and Preparation Fees
    Dealers sometimes paste a second sticker on a car’s window next to the official one, listing charges with names like “pre-delivery inspection,” “dealer prep,” “vehicle prep,” and “vehicle procurement.”

    The fix: Contest them all. They’re part of the mandatory destination charge—which, by the way, should also include a full tank of gas.

    Market Adjustment Fee
    This is a tough one to avoid if you are shopping for a hot seller because dealers may have little incentive to negotiate.

    The fix: Still, it’s not a mandatory charge—so it’s worth asking for a discount, especially because the added cost is not just an up-front expense. Paying extra initially also typically means losing more as the car depreciates.

    Loan Payment Fees
    Many automakers offer loans directly to car buyers—and a third of the people in our survey who got one of those loans said they were surprised by a fee connected to it. For example, Diane Weiser of Port Lavaca, Texas, says she was shocked to find that every time she called to make a payment, she was charged a $10 customer service fee. “And that was for on-time payments, too!” she says.

    The fix: Make sure you understand the payment terms before you go through an automaker’s financing arm. Check with your own bank, too, which may offer a better deal and lower or no fees.

    Unnecessary Add-Ons

    Though not technically fees, dealers often try to upsell unnecessary services or features, including these.

    VIN etching: A local mechanic will charge you less for this anti-theft measure, which involves etching the vehicle identification number on the car’s glass. Or buy a do-it-yourself kit for as little as $20.

    Extended warranty: A warranty that covers repairs after the manufacturer’s warranty expires can provide peace of mind. But it can add thousands to the cost of the car. CR recommends buying a reliable vehicle and setting aside an emergency fund instead.

    Disability and life insurance: Some dealers offer these and similar policies with your auto loan to help you pay for the vehicle if you are injured or die early. But you can get cheaper coverage through your primary home, car, or life insurer.

    Rustproofing, paint sealing, or fabric protection: Today’s cars are built to withstand corrosive weather and road conditions, so they don’t need additional treatments, which can add hundreds to the cost of your car. Paint sealants are basically just wax that will wear off after a few months. And the interior protection is just expensive spray-on fabric protectant.

    Editor’s Note: This article has been updated since it originally appeared in the July 2019 issue of Consumer Reports magazine.


    Jon Linkov

    Jon Linkov is the deputy auto editor at Consumer Reports. He has been with CR since 2002, covering varied automotive topics including buying and leasing, maintenance and repair, ownership, reliability, used cars, and electric vehicles. He manages CR’s lineup of special interest publications, hosts CR’s “Talking Cars” podcast, and writes and edits content for CR’s online and print products. An avid cyclist, Jon also enjoys driving his ’80s-era sports car and instructing at track days.