What is Find the Best Car Price and Why is it Free?

Dealer Fees: Which Ones Should I Pay?

Dealer Fees Which One Shoud I Pay

Dealer Fees Which One Shoud I Pay

After you've poured in all the hard work to negotiate a price you're satisfied with, you realize there are a bunch of other fees tacked on.

The last thing you want when buying a new vehicle is unexpected fees, and the key is to understand and know which ones to push back on or negotiate down.

Required Dealer Fees

Required Fees

Some legitimate fees are required when you buy a car. These fees include:

Documentation Fee

The documentation (or "doc") fee is the cost for preparing the documents to sell the car. This fee covers the cost of doing the office paperwork required to sell a car. This is a legitimate fee, but the cost can vary drastically from $50 to $500. Typically, you won't find out about this fee until you are about to sign the vehicle's paperwork. Some states charge more on average for documentation fees.

Below are the average and maximum documentation fees for each state:

StateAverage FeeStatewide Cap
Alabama$485No Limit
Alaska$200No Limit
Arizona$410No Limit
Arkansas$110$129
California$85$85
Colorado$490No Limit
Connecticut$415No Limit
Delaware$292No Limit
Florida$670No Limit
Georgia$545No Limit
Hawaii$250No Limit
Idaho$265No Limit
Illinois$160$303.60
Indiana$150No Limit
Iowa$135$180
Kansas$285No Limit
Kentucky$315No Limit
Louisiana$155$200
Maine$410No Limit
Maryland$295$300
Massachusetts$340No Limit
Michigan$165$230 or 5% of cash price
Minnesota$75$125
Mississippi$230No Limit
Missouri$200$200
Montana$299No Limit
Nebraska$280No Limit
Nevada$440No Limit
New Hampshire$372No Limit
New Jersey$335No Limit
New Mexico$330No Limit
New York$75$75
North Carolina$550No Limit
North Dakota$175No Limit
Ohio$250$250 or 10% of cash price
Oklahoma$270No Limit
Oregon$75$115 or $150 if filed electronically
Pennsylvania$130$118 or $141 if filed electronically
Rhode Island$220No Limit
South Carolina$220No Limit
South Dakota$115No Limit
Tennessee$495No Limit
Texas$135No Limit
Utah$305No Limit
Vermont$210No Limit
Virginia$490No Limit
Washington$150$150
West Virginia$185No Limit
Wisconsin$190No Limit
Wyoming$495No Limit

Sources: SalesTaxHandbook and Edmunds

Registration

Every state has a registration fee, which is how much it costs to register a new car. The registration fee also covers the cost of the license plates. The dealership provides the registration service for you, and the cost will depend on the vehicle's price. More expensive vehicles have higher registration fees. The registration fee is typically not negotiable with dealers, but some dealers may offer specials that waive the fee.

Sales Tax

Sales tax is another non-negotiable fee that comes with buying a car. The sales tax varies by state, and it's based on where you register the car (not the state you bought it in).

Dealership Dealer Fees

Dealership Fees

Destination Fee

The destination fee is meant to cover the dealership's cost to get the car delivered from the factory. Typically, the destination fee is non-negotiable, and you may still have to pay it if you pick your car up right from the factory.

Below are the destination fee charges for each manufacturer:

ManufacturerDestination Fee
Acura$965-$995
Audi$995-1095
BMW$995
Buick$995-$1,195
Cadillac$995-$1,695
Chevrolet$995-$1,695
Chrysler$1,495
Dodge$1,495
Ford$1,195-$1,245
Genesis$1,045
Honda$995-$1,175
Hyundai$1,005-$1,185
GMC$1,295-$1,695
Infiniti$1,025
Jaguar$1,050-$1,150
Jeep$1,495
Kia$995-1175
Land Rover$1,050-$1,350
Lexus$1,025
Lincoln$1,295
Mazda$995-$1,175
Mercedes-Benz$1,050
Mitsubishi$995-$1,195
Nissan$950-$1,095
Porsche$1,350
RAM$1,695
Subaru$925
Tesla$1,200
Toyota$995-$1,175
Volkswagen$995-$1,020
Volvo$1,045-$1,095

Advertising Fees

Manufacturers require dealerships to participate in regional advertising. Many dealers then try to charge an advertising fee so that you cover the cost of the advertising.

Dealer Prep

Many dealers will add a fee of around $200 to account for preparing the car for sale. However, you're already paying the destination fee, which is to cover dealer expenses.

Extended Warranty & Maintenance Plan

Many dealers will try to sell you an optional extended warranty. You can negotiate the features and price.

Financial Dealer Fees

Financial Fees

Credit Insurance

Credit insurance is optional, but the cost won't be negotiable. The purpose of credit insurance is to cover your car loan after an accident. Some policies will also kick in if you lose your job, become disabled, or pass away. Your car loan should not require you to buy this add-on, and some life or disability insurance may offer similar benefits.

GAP Insurance

Guaranteed asset protection (GAP) insurance is required for some leased vehicles. However, it's typically optional if you are buying the car. If the vehicle is stolen or totaled, the GAP insurance will cover the difference between your loan and the vehicle's value.

Loan Payment Fees

It may be convenient to get your loan through your dealership, but if you do so, you will have to pay an additional fee so the dealer can pay their bank.

Market Adjustment

New vehicles may come with a "market adjustment" fee. It's not a required fee, so it's one to push back on.

Additional Dealer Fees

Additional Fees

Additional Dealer Markup

The Additional Dealer Markup is basically just another way for dealers to make a profit. It's often arbitrary but can easily be missed, so keep an eye out for any ADM fees. Ask the dealer specifically about the ADM and why it's being charged. This is often enough to negotiate the fee or get rid of it altogether.

VIN etching/Anti-theft Measures

Getting the vehicle identification number (VIN) etched on the windshield will supposedly deter thieves. Some dealerships will offer VIN etching or other anti-theft options like alarm systems or tracking units for an added fee. You can often get VIN etching done for cheaper somewhere else or even do it yourself with a simple kit.

Dealer Add-Ons

Dealers may add equipment like mudflaps, window tinting, or wheel locks and try to charge you for it.

Paint & Fabric Protection

It's very inexpensive for the dealership to perform, but they may charge a hefty fee for it.

Transportation Fees

If you were looking for a particular model, color, or version of a vehicle, you might have to pay additional transportation fees to get it shipped to the dealer. You could still try to negotiate for the dealer to cover this cost, and you should certainly not pay this fee if the vehicle was already on the lot as you're already paying the destination fee. Demo cars typically do not require this fee.

Fees to Negotiate

The top two fees to negotiate are:

  • Dealer preparation fees. The dealer preparation covers the cost of washing and preparing your car. Ask if this is required and find out about avoiding the fee.
  • Additional transportation fees. Instead of paying an additional destination or transportation charge to get a specific vehicle in the lot, see if the dealership will cover this cost to get you to stay with them.

Fees to Avoid

Of the potential dealership fees, there are some you should try to avoid. Push back on the following fees:

  • Dealer Fees to AvoidAdvertising fees Arguably, the dealer should include the cost of regional advertising in the car's price, not tack it on as an additional fee.
  • Dealer add-ons. Most of these services you can get done elsewhere for less money.
  • Paint protection. Consider getting it done elsewhere rather than letting the dealer overcharge you for it.
  • Anti-theft measures. Opt to have these services done elsewhere if they are of interest, it will be less expensive than at the dealership.
  • Market adjustment. This is an optional and arbitrary fee. Ask the dealer to explain the fee and the reasoning behind it. It may be one you can negotiate on or eliminate.

How to Negotiate Dealer Fees

Here's how to negotiate dealer fees without losing out on the car:

  • Negotiate Dealer FeesDetermine your local fees. Find out what you need to pay for sales tax, registration, and documentation.
  • Ask early. Ask early on in the process, as this will position you as an informed buyer and help to guide your overall negotiations.
  • Shop dealer fees. Some states may have higher documentation fees. Consider looking at dealerships in neighboring cities or states for better prices on documentation fees.
  • Examine supplemental stickers. Markups and dealer add-ons may be available on a supplemental sticker next to the factory sticker. Beware of these dealerships, or at the very least state that you will not pay for those items.
  • Request the out-the-door price. Ask for a full breakdown of all the fees. This way, you know exactly what's included and can see which fees to negotiate or how the fees should impact your overall price negotiation.

Dealer fees are a cost of car buying that can take you by surprise. Dealerships make money from extra services, so it's important to know the breakdown of all the fees so that you can make the most informed negotiations. Make sure to check your vehicle purchase agreement for any unwanted fees.

Frequently Asked Questions

Are dealer fees negotiable?

Some dealer fees are required and others are negotiable. The required fees are registration, documentation, and sales tax. Any other fees you may be able to negotiate.

Which fees should I pay when buying a car?

When buying a car from a dealership, you must pay for registration, documentation, and sales tax.

Which dealer fees should I not pay when buying a car?

Avoid paying the dealer for:

  • Dealer preparation charges
  • Paint/fabric protection
  • Rustproofing
  • VIN etching
  • Additional transportation fees outside of the destination fee

Which dealer fees are legitimate?

The legitimate dealer fees include:

  • Sales tax
  • Registration
  • Documentation
  • Destination

What is a destination fee?

The destination fee is a shipping fee the manufacturer charges to transport the vehicle to the dealer lot. The dealer passes on this cost to the car shopper, and it will always be listed on the MSRP window sticker/ included in the vehicle invoice.

How do I avoid dealer fees?

While you cannot avoid some dealer fees, you should seek to avoid the optional fees. The best way to do this is to ask for the out-the-door price and to negotiate that cost rather than negotiating the cost of the vehicle and the fees separately.

How much are the dealer fees when buying a car?

The cost of dealer fees varies by the dealership, state, and vehicle. Ask for the out-the-door price so you can see a breakdown of how much you'd be paying in dealer fees. Do your research ahead of time to find out how much the required fees cost in your state.