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Most dealers in my area add a dealer fee. It ranges from $400-$800 from dealer to dealer.
They add this fee on top of the price.
For example, if you discuss Invoice Price, they add their $500 fee to the invoice price. To me, this is no longer invoice price, it's invoice price plus $500.
I see Truecar dot com lists prices that folks are paying...and they list invoice price and sticker price. But Truecar does not mention dealer fee in their breakdown.
How does dealer fee come into play when negotiating a deal?
Dealer fee comes into play as an additional profit center to be negotiated.
If an agreed upon price for a vehicle is "$X", and the dealer than adds the dealer fee to that, than the agreed upon price is a higher figure. It's simply another sales tactic to add profit back into a deal, especially when you're in the area of $400-800 fees.
Better to negotiate to an agreed price for the vehicle "OTD" (out the door).
Dealer fee is their way of recouping some profit after you've just negotiated and scored what you thought was a great deal. FL is notorious for this. TX, on the other hand, has very minimal dealer fees from where I've bought cars, typically about $50-$100.
You have to read the fine print before deciding to agree to a price, and most people neglect to ask what the dealer fee is upfront, so it's a big surprise after they've agreed to buy the car and settled on an amount. Last time I bought a car in FL, the dealer fee was $988.
When they sprung that on me, I told them they needed to reduce the price of the car by that amount. They refused, so I walked. Later that day they called me back and said they'd do $500, which I agreed to.
The Dealer Fee - like everything else they throw at you - is negotiable.
The last time I bought a vehicle from a dealer, they threw on a "State Mandated Documentation Fee" of $300. When I told the salesman they could take that fee and shove it, then got up to walk out of his office, they suddenly decided it wasn't mandatory.
A lot of dealers throw this at you when you are sitting at the desk of the finance guy, even if you aren't financing through the dealer. They hand you paperwork with a bunch of surprises.
Just refuse to pay them. Get out of your chair and tell them you are leaving. If they don't concede, leave.
A lot of dealers throw this at you when you are sitting at the desk of the finance guy, even if you aren't financing through the dealer. They hand you paperwork with a bunch of surprises.
Just refuse to pay them. Get out of your chair and tell them you are leaving. If they don't concede, leave.
Exactly!
They play games with you. But they know that if you leave, you'll never come back. So they'll stall you off until they know you're serious about leaving. Then they suddenly get serious about money.
This is why I too like the out-the-door pricing model. Agree to a price to get the car that includes all the fees and taxes, and then it doesn't matter what the individual fees are so long as they meet your criteria.
Keeping focus on your bottom line keeps fees from creeping in as you go through all the paperwork and upselling.
Having worked at a dealership I can say with 100% certainty that "dealer fees" (or documentation, or doc fees) are bogus. It's just a little extra that most states allow car dealerships to tag on at the end to help cover the overhead cost of doing the paperwork. Most of the time they can be negotiated away, but if the fee is significant - say $200 or so - I would recommend paying the fee but insisting that the dealership knock the amount of the fee off of the selling price of the car. Reason being, you pay sales tax on the price of the car only but not on the doc fee, so by deducting the amount from the sale price you also save the sales tax on that amount.
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