Hidden Fees When Buying a Car

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Why and How

Doc fees are a standard part of the buying process, but you can negotiate the amount, especially if you’ve done your research and found that the dealer’s fees are higher than the industry average. In some states, doc fees are capped, so be sure to check your state’s regulations to ensure the fees are within the legal limit.

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Why and How

Sales tax is generally unavoidable, but you can potentially lower the amount you pay by purchasing a vehicle in a state with a lower tax rate or if you qualify for certain tax exemptions (e.g., military exemptions or electric vehicle tax credits). However, this is usually difficult to change during the transaction itself, as it’s imposed by the government.

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Why and How

You can sometimes negotiate to waive or reduce the dealer prep fee, especially if you're purchasing a vehicle with a trade-in or if the car is already prepped and ready to go. It’s worth asking the dealer to remove the fee or lower it if it’s not a necessary charge.

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Why and How

Destination charges are typically fixed by the manufacturer, so they are usually non-negotiable. However, it’s always a good idea to confirm that the destination charge is clearly stated as part of the total price and not added later. Some dealerships may be willing to include the destination charge in the negotiated price of the car to make the overall deal more attractive.

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Why and How

Advertising fees are usually a dealer's internal cost and typically non-negotiable. However, if the dealership is inflating this fee or it’s not clearly explained, you can try negotiating it down or requesting the fee be waived. If you spot this fee on the invoice, ask the dealer to explain the breakdown and see if they can justify the charge.

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Why and How

Extended warranties are often offered as add-ons and can be negotiated or declined. If you’re interested in an extended warranty, it’s better to shop around for third-party warranties, as they might offer more affordable options. You can also ask the dealer to reduce the price of the warranty, or remove it entirely if you don’t think it’s necessary for the car you’re purchasing.

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Why and How

Loan origination fees are sometimes negotiable depending on the financing terms. You can ask the dealer if they are willing to lower or waive the fee, especially if you have a good credit score and are financing a larger amount. Alternatively, consider getting pre-approved for financing through your own bank or credit union to avoid these fees altogether.

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Why and How

Title and registration fees are imposed by the state and are generally non-negotiable. However, it’s important to ensure the cost is accurate and that you’re not being overcharged. You can check with your local DMV or the state website to confirm the typical fees in your area before committing to the charge.

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Why and How

These fees are typically required by the state and are non-negotiable. However, some dealerships may cover the cost as part of the sale, or they may include it in the 'documentation fee.' Always ask the dealer if inspection fees are included, or if they will cover the cost of the inspection and emissions test.

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Why and How

Gap insurance can often be purchased through a third party for a lower price than the dealership offers. If you already have car insurance, check if they provide gap insurance as part of your policy. If the dealership is pushing it, ask them to remove the charge or negotiate a better price for the coverage.

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Why and How

Shop around for financing options and get pre-approved through a bank or credit union. If you have a good credit score, use that as leverage to negotiate a lower interest rate from the dealership. The more informed you are about current rates, the better equipped you will be to negotiate a fair deal.

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Why and How

Environmental fees are generally non-negotiable, but they should be disclosed clearly. If you find that the fee is significantly higher than average, you can ask for an explanation or request that it be removed from the total cost. In some cases, dealers may include this fee in the doc fee or other charges, so it’s important to verify all fees.

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Why and How

These add-ons are often overpriced, and you can decline them if you don’t believe they are necessary. If you’re interested in protecting your vehicle, it’s much cheaper to purchase third-party products or take the car to a professional detailer for similar services.