To many drivers, the worst part of owning a vehicle is the purchase experience. There’s an adversarial relationship between dealers and shoppers, whether we are haggling over the price of a shiny new car or a used vehicle.
Thanks to online resources like U.S. News & World Report’s vehicle rankings and price reports, buyers are more knowledgeable than ever about real – and added – costs. Unfortunately, that’s also made dealers more creative about how to hide those add-ons.
Here are nine ways dealers try to inflate the purchase price, and how to avoid them.
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Somebody’s got to pay for shipping the vehicle from the factory to the showroom. Dealers normally pass that on to you, and it’s up-front and standard. Sometimes it’s called a “delivery charge.”
Look at the sales contract carefully to make sure you are not paying twice for the same thing. Destination or delivery, but not both.
Don’t You Love Our Newspaper Ads and TV Commercials?
Of course you do, so much so that one of them actually lured you into the showroom. But pay for them? Nah.
It’s becoming more common for dealers to tack on $100 or more to cover their ad buys. Just say no – it’s their cost of doing business, not yours. What’s next? Paying for the salesperson’s new shoes to walk you around the showroom?
Vehicle Registration Fee
You can avoid the fee for registering your new wheels, including getting new license plates or switching current plates from your trade-in to your trade-up, if you do it yourself.
But since most of us consider a trip to the DMV as much fun as a root canal, this is more of a convenience fee than a hidden fee.
Somebody has to do the back office work to check your credit rating, prepare the sales contract, and do all that DMV stuff. Only a few states legally limit what a dealer can charge for paperwork – usually that’s no more than $250 or a percentage of the purchase price. In states where there is no fee limit, paperwork fees can be as much as $500. Make the dealer break it down line-by-line so you can see what costs are legit, and what is padding.
Carmakers offer special incentives for particular models, either to “move” a model whose popularity may be slipping, or to wage a marketing war on a similar model by a competing brand. The hidden charge comes into play when the dealer doesn’t tell you about a rebate, so always ask.
There’s a second hidden charge involving rebates: sales tax. Some states charge sales tax on the full purchase price before the rebate, and other states charge tax on the reduced price. Some dealers might try to pocket that difference. Depending on the amount of the rebate and the sales tax rate, that could be $150 or more. Check with your DMV or state insurance association to find out what the rules are.
How much should it cost for the dealer to put oil and windshield wiper fluid into the vehicle? Nothing. That should be part of the cost of doing business to give you, the buyer, a product that’s ready to use.
Okay, you should pay for the gas, but you should dispute any tacked-on “service fee,” just like the hefty refueling charges car rental companies add when you return a vehicle running on empty.
Rust, Paint, and Fabric Protection
Why pay for this when car companies already do that on the assembly line? It’s a lot cheaper to buy a bottle of touch-up paint for those inevitable minor dings and scratches that go with normal vehicle use, and a can of ScotchGuard fabric or leather treatment to clean up after the kids. Unless you live in a flood-prone zone, or use your car as an amphibious vehicle, the manufacturer-installed rust protection should be enough.
These are big profit centers for dealerships, and you’ll be pressured to buy one to keep you covered after the standard three-year/36,000-mile warranty is in your rearview mirror.
The problem with extended warranties – besides the $1,000 they cost – is that they are from a third-party insurer, not the dealer or manufacturer, and there’s no guarantee that the Fly-by-Night Extended Warranty Service will be around in three years when you need them.
Before you take the bait, check out the warranty company with the Better Business Bureau, the American Insurance Association (www.aiadc.org), or the insurance association in your state. Or, buy a car from a manufacturer that offers a longer warranty period, such as Hyundai.
Yesterday Was Cheaper
The newest trick in the books is to add a couple of hundred bucks overnight, between the time you agree on a purchase price after being worn out mentally and physically by hours of haggling, and the next day when you return to sign the contract and drive away.
You can try to protect yourself by requesting a “take home” copy of the unsigned contract, although it’s unlikely a dealer will give you that, just in case you want to take it down the road to another dealer to get a better deal. So, snap a cellphone photo of the bottom line sales price or write it down on a little notepad, so you have proof of an overnight price increase.
“Arm yourself with every piece of information about a potential vehicle purchase beforehand and you’ll do much better in getting the vehicle you want and need at a fair price,” says AAA New York’s Robert Sinclair Jr. And if you still don’t like the deal, including the hidden charges, walk away.