The Inside Story on Dealer Fees

The Inside Story on Dealer Fees

Posted at Mon, Nov 27, 2023 9:00 AM

The last time you bought a vehicle, did you pay a dealer fee?

Unless you bought at a Mullinax dealership, you probably did, and without thinking too much about it. All dealers charge that fee, right? You have to pay it – just like sales tax or title fees – so it must be some kind of regulation or something.

No, it’s not.

They are designed to do one thing, and that’s to add profit to the car dealer.

In other words, they’re a tricky way to transfer hundreds of dollars from your bank account to a dealer’s bottom line.

So many auto buyers are used to seeing “dealer fees” on their sales paperwork that they don’t stop to think about what such fees are or whether they’re a good idea for consumers. (Hint: They’re not.)

Here’s a look at how dealers use fees to their advantage – and details buyers should know:

  • An estimated 95 to 99 percent of dealers in Florida charge dealer fees.
  • Fees can add $900 to $1,500 or more – as much as 8 to 10 percent of the vehicle’s price – to the final cost of your new ride.
  • The term “dealer fee” covers a lot of ground, and dealers can get pretty creative in what they call them: an overall dealer fee, processing fees, documentation fees, administration fees, pre-delivery cleaning fees, electronic title fees and reconditioning fees for used vehicles, among others.

All those fees can get confusing, and that’s what dealers count on. Plus, having multiple fees also allows dealers to stack them up and charge more.

And dealers have two more tricks up their sleeve: 

  • They bring fees into the deal after you’ve already agreed to the numbers.
  • And they make the fees sound official, so you think it’s a requirement from the government. 

The result: People roll over and pay it because they think it’s a requirement of doing business.

  • Under Florida law, dealers who charge dealer fees must apply the fees equally to all buyers.

They can raise or lower the fees whenever they want, but they have to declare it in writing on their website.

If you want to find it, look for the tiny type on one of the vehicle inventory pages. It might look something like this:

Sales tax or other taxes, tag, title, registration fees, government fees, $199 tag agency/electronic filing fee and $995 dealer service fee are not included in quoted price.

If a dealer charges a dealer fee, you can’t just ask for it to be removed. That’s because they’re legally not allowed to take it off the invoice. if they choose to make fees part of the sales process, they have to charge them, and charge every customer.

Nonetheless, many still use it as a bargaining tool.

A lot of dealers will negotiate some of that money away by lowering the price of the car, but leave the fee amount the same.

So if a dealer can’t legally remove those sneaky dealer fee(s), how can you avoid them?

Do your research. Look at dealer websites and see what fees they charge and the amounts.

Then keep looking until you find a dealer that doesn’t charge them.

Mullinax Ford of Mobile is a leader in the tiny percentage of auto retailers that don’t charge dealer fees – something that a lot of consumers don’t believe at first.

Our dealerships strive to make the buying process as easy and pleasant as possible, which is why we make our pricing as honest, transparent, and simple as possible. We clearly mark the price of every vehicle right on the window sticker – which eliminates the need for haggling, ensures that everyone has access to the same buying opportunity, and prevents those last-minute dealer-fee surprises. Just add tax and title to the sticker price to see your final cost.

Check out our website or visit our dealerships to experience the ease of buying a vehicle without dealer fees.

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