What Is a Dealer Handling Fee?
Your car’s final price may include some unexpected charges. Here’s a guide to what’s fair and what’s negotiable.
Getty Images
Article QuickTakes:
As you excitedly take the final steps to sign the deal for your new car, you might notice a number of items added onto your contract that significantly raise the final price.
Dealer handling fees include charges that are part of every car purchase but can also include add-ons that are sometimes negotiable or entirely avoidable. It’s beneficial to know before you sign on the dotted line.
Unavoidable Fees
Dealers typically add delivery and handling fees called conveyance and documentation fees to cover the costs of handling the necessary paperwork for your vehicle purchase. These can add around $75 to upward of $500 to the final tally.
They’re entirely legitimate, as are line items including your required state sales tax and the dealer charging to complete your title and registration documentation (also called tax, title, and license), which may be easier than getting into a long line at your DMV to do it yourself.
Your dealer may also take care of the necessary state vehicle inspection and emissions testing procedures before you take ownership, again saving you a trip to an off-site inspection facility. They will, however, charge you for doing so.
You’ll also have to pay the carmaker’s fixed destination fee, which is the price it adds to deliver the car from the factory to your dealership. There’s been significant criticism of the major increases many automakers have recently made to their destination and delivery fees; unfortunately, they’re set by the manufacturer, not the dealer.
Items You Can Negotiate
If you’re desperate to buy a particularly popular or hard-to-get new automobile, you may find a market adjustment fee added to the price. That’s a made-up number a dealer adds to boost their profit, and it is entirely open to negotiation.
Many dealerships also add an advertising fee to the final price of your purchase to offset the costs they incurred for the print, online, or TV ads that bring in customers.
Depending on your deal-making skills, you may be able to negotiate the final price of your vehicle to counterbalance many of these last-minute delivery and handling fees, especially if they drastically alter the amount you expected to pay for the vehicle.
Add-Ons You May Look To Avoid
Many car buyers are asked to pay a dealer prep charge for removing shipping plastics or vacuuming out the car as part of the transaction, but this should be included in the price of the vehicle, as your car comes clean from the factory and doesn’t need any extra scrubbing, inside or out.
There’s also a classic range of add-on services including fabric protection, paint protection, rustproofing, and undercoating, as well as VIN etching. All of these are unnecessary options if you’re getting a factory-fresh, new automobile. You can get a do-it-yourself VIN etching kit if you feel that’s a critical theft deterrent.
You may also be asked to consider financing-related extras such as Guaranteed Asset Protection (GAP) insurance, or low-protection insurance designed to cover the difference between your loan and your vehicle’s value in case of theft or an accident. A quick way to erase many of these insurance add-on costs is to bring your own financing from an outside bank or lender.
