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Useless Car Dealership Fees and How To Avoid Them

Last updated 08/02/2023 by

Jamela Adam

Edited by

Fact checked by

Car dealerships are notorious for tacking on extra fees and charges to the purchase price of a vehicle to increase their profit margin. These dealer fees can often add hundreds or even thousands of dollars to the price of a car. While there are some unavoidable fees — such as documentation fees and sales tax — other fees, like advertising and dealer preparation fees, are negotiable.
When shopping for a new or used car from a car dealership, it’s easy to get caught up in the excitement of test-driving different models and imagining yourself behind the wheel of your dream car. However, it’s important to keep in mind that many dealerships charge additional fees for their services. These fees can add up quickly and drive up the costs of your car purchase (no pun intended).
Thankfully, some of these dealership fees can be negotiated. By familiarizing yourself with these fees, you can save money and avoid overpaying on your next vehicle purchase.

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6 car dealership fees to avoid or negotiate

Not all car dealership fees are mandatory. Here are six dealership fees that you may be able to negotiate or even avoid altogether:

Loan protection insurance

If you were to find yourself in a situation where you’re unable to make your car payments, auto loan protection insurance could be a lifesaver. This insurance would cover the remainder of your loan balance, even in the event of your death.
While some dealers may pressure you to buy their insurance, don’t feel like you need to. It’s typically much more affordable to purchase loan protection insurance from other insurers on the market. Just be sure to read the terms, conditions, and exclusions of the policy before signing on the dotted line.

Extended warranty

Many car dealerships will offer extended warranties with a car purchase. With an extended warranty, you don’t have to worry about potential car repair costs once the manufacturer’s warranty on your vehicle expires. However, car dealers often charge thousands of dollars for an extended warranty, and some may not even cover routine maintenance.
Before agreeing to pay this fee, be sure to do your homework. It’ll most likely make more financial sense to order an extended warranty directly from your vehicle manufacturer before the original one expires.

VIN etching fee

A vehicle identification number, or VIN, is composed of 17 characters that act as a unique identifier for your vehicle. VIN etching is the process of etching a vehicle’s VIN onto its windows, which is done for security purposes to deter car thieves.
Some car dealerships charge you as much as $400 for VIN etching. That’s way more than what you should pay, as you can do it yourself for around $20 simply by using a glass etching kit.

Advertising fee

In some cases, sneaky car dealerships may even charge you for advertising — that is, the use of promotional material like print ads, web banners, and commercials to market their vehicles on a regional or national level. These fees typically show up on your invoice as “marketing” or “solicitation” and can be upwards of $1,000.
If you notice that you’re being charged an advertising fee, negotiate to have it removed from your invoice since it should already be rolled into the vehicle sticker price.

Dealer preparation fee

Vehicle or dealer preparation fees are extra charges dealerships may tack onto a car’s final price tag to prepare it for delivery. This fee covers the costs of washing the car, removing protective coverings, and ensuring that everything is in working order.
Dealer preparation fees can cost anywhere from $100 to several hundred dollars. If you spot this fee on the final paperwork, always negotiate to have it taken off since preparation should fall under the dealer’s normal operating costs.

GAP insurance

Short for “guaranteed asset protection,” GAP insurance is an additional fee you may be asked to pay if you’re leasing or financing a vehicle with a dealership. This policy covers the difference between the car’s value and the loan payments in case the vehicle is totaled or stolen. With GAP insurance, you won’t be liable for the remaining balance on your loan if the unexpected happens.
Costs for GAP insurance vary, but dealerships typically charge a flat fee of $500 to $700. While purchasing a policy from the dealership may be convenient, it’s typically more expensive than if you were to purchase it from an insurance company.
When it comes to working with car dealerships, James Allen, CFP and founder of, says it’s crucial to question everything: “Car shopping is a game, and dealers rely on vague fees to boost profits. But knowledge is power. Do your homework to determine what charges are really worth paying. Your wallet will thank you.”

What are some mandatory car dealer fees?

Some car dealer fees that are not negotiable include vehicle registration fees, sales tax, and documentation fees. Here’s what each of these costs will cover:
  • Vehicle registration fee: Every state requires drivers to register their vehicles. If you purchase a car from a dealership, they’ll typically charge you the cost of registration and title, as well as an additional fee for completing this requirement on your behalf.
  • Sales tax: The sales tax rate you’ll pay for a vehicle will vary depending on your state. For example, if you buy a vehicle from a dealership in California, expect to pay a 7.5% state sales tax rate, regardless of the vehicle you purchase.
  • Documentation fee: The documentation fee, or doc fee, is what dealerships charge customers for handling and processing paperwork. The cost of documentation fees can vary widely, with some dealers charging less than $100 and others charging hundreds of dollars. For example, the average documentation fee in California is $80, which is the maximum amount dealerships can charge by law.

Pro Tip

Some car dealerships may sell vehicles for more than the MSRP. Use industry guides like Kelley Blue Book and Edmunds to look up a car’s value and determine how much you should pay for it.


How much are most car dealer fees?

According to Car and Driver, an American automotive enthusiast magazine, you can expect to pay anywhere from 8% to 10% in dealer fees when you purchase a vehicle directly from a car dealer. For example, if your car costs $30,000, you can expect to shell out $2,400 to $3,000 in dealership fees. These fees generally include the cost of new license plates, dealer preparation services, documentation fees, and state sales tax. Knowing which of these fees are negotiable can save you hundreds or even thousands of dollars.

Why do car dealerships charge so much?

The answer is simple: Car dealerships charge as much as they do in fees to earn an extra profit. Unfortunately, dealers often get away with charging higher prices and extra fees because their customers don’t know any better and are afraid to negotiate. So before you purchase a new or used car from a dealership, remember to do your due diligence to figure out whether certain dealership fees can be avoided or negotiated.

How can I avoid fees when buying a new car?

The simplest way to avoid car-buying fees, like documentation fees or VIN etching fees, is by purchasing a vehicle from a private seller. That said, in most states, you’ll still have to pay sales tax on the purchase price of the vehicle, as well as a title and registration fee.
Another way to avoid fees is by negotiating before signing on the dotted line. Unless the fee charge is set in stone, you can typically ask the dealer to remove that cost from all the paperwork.

How can I avoid paying destination fees?

A destination fee is a charge for delivering a new car from the factory to its point of sale. The destination fee on a new car typically ranges from $1,000 to $1,500, but the cost can vary depending on the type of car you purchase. Unfortunately, while many other types of dealer fees can be reduced by negotiating, you typically can’t get around paying a destination charge.

Are most dealers charging over MSRP?

If you’re in the market for a new car, you may have noticed a price labeled MSRP, which is short for “manufacturer’s suggested retail price.” While some dealers may charge customers prices close to the MSRP, other dealers may tack arbitrary amounts onto that value to increase their profit.
In early 2023, CNN reported that due to tight inventories caused by the COVID-19 pandemic, 80% of car buyers were paying more than the MSRP in 2022. Thankfully, as inventories have returned to normal levels, only 36% of buyers are paying above sticker price as of 2023.

What do you pay upfront when financing a car?

Typically, you aren’t required to pay upfront costs if you don’t want to. Instead, you can roll over most of these costs to your loan and pay them as part of your monthly car payment installments. However, choosing to pay sales tax and title and registration fees upfront can save you money in the long run by lowering your monthly loan payments. Many customers also choose to put 20% down on the vehicle to lower the interest they’ll incur over the life of the loan.

Key Takeaways

  • While some car dealership fees are mandatory, others can be negotiated or avoided altogether. Before paying a car dealership for a new or used car, always check the invoice for any fees that can be reduced or removed.
  • Loan protection insurance can be purchased from other insurers for a lower cost than what you would pay at a car dealership.
  • Extended warranties are often cheaper to order directly from vehicle manufacturers.
  • VIN etching can be done yourself for around $20, as opposed to paying the dealership $400 for the same service.
  • Advertising fees should already be factored into the vehicle sticker price — and thus can be removed from the final price of the car.
  • Dealer preparation fees can also be negotiated, since they should fall under the dealer’s normal operating costs.
If you’re ever unsure about a certain fee on the invoice, always ask for more information before purchasing the car. Doing so can save you thousands of dollars in unnecessary fees and add-ons. Looking to save on financing? Keep in mind that while getting an auto loan from your car dealership is convenient, it typically comes with higher interest rates.
Before financing a vehicle with a car dealer, be sure to research auto loans from financial institutions like banks and credit unions that offer more competitive APRs. If you’re not sure where to start, check out SuperMoney’s list of the best auto loan companies to find an auto loan that’s right for you!

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