Some Dealer Fees Are Legit, Some Are Totally Fake, Here Are The Ones You Have To Pay

In most states, you have to pay sales tax on your car purchase. Alaska, Montana, Delaware, New Hampshire, and Oregon are the exceptions to the rule. Typically, you will pay the tax based on where you register the car, and not where you buy it (if you are purchasing in another state). However, some states like California and Arizona have laws that dictate if a car is physically driven off the lot, the buyer is on the hook for the sales tax in those respective states regardless of where the buyer resides. So buyers need to factor that additional cost into their total budget.

The Department of Motor Vehicles in every state has a fee structure to process your license plates, registration, and so on. The dealer will pass these fees on to the customer. Some states have small itemized things like “tire taxes,” so if you see a long list of small fees, these are usually just the cost of doing business in that state. Also if you are buying a car from another state, some dealers employ a third-party titling and paperwork service to handle that intrastate transaction, this cost is usually between $300-$500.

This is one that typically comes up in pre-owned cars. Often dealers will advertise a price that is competitive for the market only to add in a “reconditioning fee” or even worse a “certification fee” to a car that is already advertised as factory-certified. Most dealers factor the reconditioning and certification costs into the price of the car, while the slimy ones pull this move and they may be in violation of FTC regulations in doing so. If you encounter this tactic, push back on it, and I would advise you to take your business elsewhere.

Sometimes called a “security fee” dealers will say that it helps with theft recovery by having the VIN etched into the window. While it is certainly a fine thing to have, the kit to do so costs abut $25 dollars and usually the dealers will have an itemized charge of $400-$600 on the quote. Most stores will remove it if they are serious about making a deal.

Dealers will say that having the tires filled with 100 percent nitrogen means pressure doesn’t change as much as temperature changes, and this is true. However, the air that you would normally put in your tires is already 80 percent nitrogen, and there is a pretty good chance the dealer is just lying about actually putting nitrogen in your tires. Typically this fee is anywhere from $200-$600 and you will want to have them remove it from the quote.

These are more common on the West Coast, and while there is an actual physical device that has a real cost to it, often the dealers are charging a big markup to make your car more “secure.” Salespeople will tell you “It’s already installed so we can’t remove it,” but often the cost can be negotiated down or removed completely.

One of the classic dealer tricks is offering a competitive discount on a new car and then adding in a bunch of overpriced accessories like floor mats, mud flaps, cargo protectors etc… This charge is “real” in the sense that these are actual items added to the car but usually, the dealer wants two or three times the retail cost for the accessories. Sometimes these extras can be removed or discounted, but keep in mind if the accessories are itemized on the window sticker you are probably stuck with them.

Most dealers will have some kind of generic “dealer” or “processing” fee on top of your sales tax, DMV, registration, and other charges. Some states regulate this fee and cap the cost, while others don’t. If you plan to buy a car in the Southeast be prepared for “dealer fees” ranging from $700 -$1500. You could argue that this is just extra profit for the dealership, while they will say it helps them cover the cost of non-sales staff to do all that “behind the scenes” stuff like processing paperwork for loans, registration, and tax. It’s incredibly rare for a dealer to budge on this one, so as long as all the other fees seem legit, not something a buyer should stress over too much. Some stores will discount the car enough to offset this fee.