10 Fees You Should Never Pay When Buying A Car

By: Jack Sackman

Cars are expensive to buy, and there is usually a lot of complicated paperwork involved in the sale of a vehicle. Most people are surprised when they purchase a car at how much more expensive it is than they expected, and that the price they end up paying is a lot higher than the sticker price advertised on the car they chose. This is not by accident but by design. Car dealerships slip a whole slew of additional charges into the fine print of the purchase agreement their customers sign, and those charges quickly add up and push the price higher. What car salesman count on is that their customers will not know what the charges are for, and that they can get away with telling people that the higher price is due to taxes. Don’t believe them. Educate yourself and know what charges you should not pay when purchasing a new or used vehicle.


10. Freight

What is “freight,” you ask? It is the cost the car dealership pays to ship the car you bought from the plant where it was manufactured to the dealership where it is sold. Why, you ask, should you pay to cover this cost? You shouldn’t pay to cover it. Car companies have to ship the vehicles they manufacture to their dealership network as part of the sales chain. That they try and pass this cost onto their customers is both ridiculous and insulting. And freight charges are typically around $150 to $200—not cheap. So be smart and savvy and tell the salesman at the dealership right off the bat that you refuse to pay any freight or delivery charges. And be mindful. Some unscrupulous car dealers try and charge their customers twice for delivering the car to the dealership. On some invoices, you can see a charge for “freight,” than another charge called “delivery and handling” or “destination fee.” These are all the same thing and should never be paid by the customer.

9. Dealer Preparation

Another ridiculous charge is the “dealer preparation” fee passed onto the customer. This charge is so that the dealership can prepare the car for you to drive off the lot. In most cases, this involves checking the tire pressure, topping up the fluids, and, maybe, giving the exterior of the car a quick wash. New cars require almost no preparation before being taken home from a dealership. Yet car companies love to charge hundreds of dollars in labor costs to properly prepare the car to be taken off their hands. One would think that preparing the car would be the least a dealership could do after the customer pays tens of thousands of dollars to buy the vehicle. Again, this is the car dealership passing their cost of doing business onto the customer. It’s bogus and should not be paid.

8. Admin Fee

Only slightly more annoying than the dealer preparation fee is the administration fee that most car dealerships pass to their cash-strapped customers. Some dealers also call this a “processing fee” or “documentation fee,” but it is all the same thing—it’s the cost to cover processing the paperwork on the sale of the car you bought. And, believe it or not, some dealerships charge $400 to $500 for this administrative work. Any way you look at it, that is an outrageous sum—especially since this administrative work would need to be done regardless of who pays for it. And who benefits from the proper processing of the paperwork? Only the dealership. That they try and pawn this cost off on their customers is an insult. Don’t believe anyone who tells you this charge is non-negotiable. It’s negotiable—right down to zero amount.

7. V.I.N. Etching

A growing number of auto insurers encourage car owners to have the Vehicle Identification Number (V.I.N.) etched into the window of their vehicle as this discourages thieves from stealing the car. Police departments also support this process. However, V.I.N. etching is not mandatory and should never be done at a car dealership. Yet many car dealers do this automatically after a car is sold and then charge the customer north of $200 for it. That’s way overpriced considering that many municipal police forces will etch V.I.N numbers into car windows for free. People can also buy kits that allow them to etch the V.I.N. number into their car window themselves for about $25. Bottom line—never have this done at a car dealership. It’s way overpriced.


6. Advertising

Why should you, the car buyer, pay a fee for the fact that the dealership where you bought the car had to advertise the vehicles it is selling? The answer, again, is you shouldn’t. Car sales are driven largely by price and incentives, and communicating to people about their prices and incentives through advertising is part of the car sales business. It is the responsibility of the dealership not their customers. Yet look at the fine print on any car sales invoice, and you’ll see a charge for advertising. This charge, which can run into the hundreds of dollars, is borderline criminal and should never be paid. And watch out, because, as with other charges on this list, many car dealers will try and slip this fee onto an invoice twice under different names such as “marketing” or “solicitation.”

5. Window Tinting and Other Upgrades

Say you find a vehicle on the showroom floor or out in the dealership lot that has tinted windows. You agree to buy the car and then notice on the bill that you’ve been charged more than $500 to have the windows professionally tinted. Wait, weren’t the windows already tinted? They sure were. In fact, the dealership most likely got the car from the manufacturer with the windows tinted. But that doesn’t stop car dealerships from charging customers for a procedure, and the labor involved, that they didn’t perform. If you’re buying a vehicle that already has tinted windows or other upgrades such as high-end rims, for example, don’t be afraid to call the salesman out if they try to charge you for installing these items that were already on the vehicle. Better yet, tell the dealer you’ll take regular windows or normal rims rather than what’s already on the car you want to buy. The cost to make the change will be more than the dealer is willing to pay and they’ll strike these charges from the invoice.

4. Fabric Protection

Here’s a dirty little truth—new cars these days already come with fabric protection built into them. And, if you need additional protection for the seats in your vehicle, you can buy Scotchgard at your local Wal-Mart for about $10 and spray it on yourself in less than five minutes. Yet many salesman will sneak a $200 charge for fabric protection onto a bill of sale and, if you notice it, will tell you they add it to all the cars they sell. This is a bunch of crap and is completely unnecessary. Never, ever pay for fabric protection on a car. Chances are the dealership didn’t add anything to the fabric in a car over and above what was applied by the manufacturer at the plant where the car was assembled. This is just a blatant excuse to tack on hundreds of additional dollars. Laugh this charge right off the invoice. Equally bad are paint protection fees, which is where the dealer charges you $250 for a $5 can of wax and tells you it will stop the paint on the exterior of the car from chipping. Not true. All paint on every car gets chipped over time. Don’t get us started on “rustproofing.”

3. Extended Warranties

Never buy an extended warranty under any circumstance. And not just when it comes to cars and other vehicles. You should never buy an extended warranty on a television or video game console either. This is because A) Most retail outlets will find a reason not to honor an extended warranty should you ever need to use it, and B) Most regular warranties are sufficient and likely all you’re going to get anyhow. Yet extended warranties are particularly popular among second hand, pre-owned or used cars. Dealerships and salesman love to try and sell people extended warranties on everything from the car’s engine to the transmission, radio and tires. Don’t be fooled. Extended warranties cost a lot of money with no guarantee of providing any real protection should something go wrong with a vehicle. New cars can also come with extended warranties on items such as the radio, a DVD player, etc. But, here too, these are a cost that is best not incurred.

2. A.D.M.

A.D.M. stands for “Additional Dealer Markup.” Sometimes, this is expressed as “A.D.P.” which is “Additional Dealer Price.” This is a confusing acronym meant to trick the buyer and enable the dealership to charge more than the advertised sticker price on the car in their showroom or on their lot. Basically it means the dealership can jack up the price of the car as they see fit and charge customers more than the advertised price for the vehicle they want. A.D.M. or A.D.P fees are often noted next to the sticker on a vehicle or placed next to the manufacturer’s sticker price in small print. If you see this acronym, turn and run. It means you are dealing with an unscrupulous dealership and sales force. It also means the price you see on a car is not what you will likely end up paying for it. Get out of there and go shop elsewhere for a new or used vehicle.


1. Rebates

Is there anything worse than a rebate? Rebates offer an incentive without actually producing a reward for the customer. Rebates are primarily used to get people in the door to buy a car. Once a vehicle is purchased, the buyer finds that they have to jump through a mindboggling series of hoops to get the promised rebate, or discover that there is some loophole or trick preventing them from actually getting the rebate. And while rebates are not a fee charged to customers per se, salesman use them as leverage when haggling with customers—saying they can’t go any lower on the price, but not to worry because you’ll get thousands of dollars back on the rebate. Truth is that rebates come from the vehicle manufacturer and usually apply regardless of the price that a person negotiates with the car dealership. The best thing to do is negotiate as if there is no rebate, or forget that a rebate is even being offered as the chances of you getting it are slim at best. If you insist on trying to get a rebate that is on offer, than negotiate to have it deducted from the purchase price. People who allow the dealership to mail them a cheque after the sale usually find that they end up paying taxes and interest on the rebate, which is costly and not good.