Buying a car is one of the biggest purchases you’ll make. That’s why it’s imperative that you make sure you’re a savvy car buyer in order to get the best deal.
Some people love the back-and-forth negotiation, but many prefer a more cut-and-dried approach.
And after you and the dealer settle on a purchase price, you’re not even close to being finished.
First, you must wade through a litany of fees to make sure you’re not getting overcharged.
“There’s a ton of fees out there,” said AAA car expert Jim Prueter. “The manufacturers have really cut the transaction price and the window sticker price, so there’s not as much markup.”
Fees now replace markups. They can be confusing.
“They’ll put a lot of accessories on there — rustproofing, parts package, roof rack or an extended warranty,” Prueter said. “Some things you can do without. Like fabric protection — they’ll charge you $250 when you could go to a hardware store and pay $10 to do the same thing.”
“It’s all for dealer profit,” Prueter said of the add-ons. “They’re doing it because they’re huge profit items and they don’t cost much.”
Nowadays, consumers benefit from the Automobile Sales Finance Act. It’s a single document rule, where all the details of the sale must be contained in a single document. Prueter cautioned consumers to make sure that everything that’s been agreed upon is included.
“If it isn’t in writing, the dealer isn’t going to give it to you — period,” Prueter said.
Consumers should also expect to receive another document when they pick up the car, one that Prueter called a “We owe you, you owe us.” It tends to state specific things about your car or your trade-in.
“It could be we owe you a second set of keys, or you owe us the floor mats,” Prueter said.
AAA lists some fees that consumers might see when they’re shopping for a new car:
- Delivery charge: A destination fee is already included in the price of the car, because it’s in the invoice. Make sure they’re not tacking on a delivery fee above and beyond that.
- Registration fees and sales tax: These are legitimate fees that you must pay.
- Doc fees: This is probably the most contentious fee, Prueter said. You should know what that fee is before you negotiate the deal, because it’s one fee that’s difficult to change.
“They will have the single document already printed with the doc fee already in there, so you think that you can’t take it out,” he said. “That fee is about $399 in Arizona. Some car buying services, such as AAA, charge $99.
“They’re really charging you to prepare documents, but they’ve decided this is how to make money,” Prueter said. “Some states are regulated, but Arizona leaves it wide open. This is nothing less than pure profit for the dealer.”
- Dealer fees: These include dealer prep, which already are included in the car. Make sure you’re not charged twice.
- Advertising fees: These are built into the price of the car. You’re already paying it, so you shouldn’t again.
Sometimes, there’s what’s called the window sticker addendum, which shows itemized costs above the Manufacturer’s Suggested Retail Price (MSRP).
“They can’t legally charge you more than MSRP. But they put on this sticker for things like a market adjustment fee,” Prueter said. “An example is the new Corvette, because they’re in really high demand. So they add $5,000. What they’re doing is gouging.
“If I was a customer and I saw a dealer addendum, I would walk away from the dealership.”
Sometimes, people want to trade in a car that they owe more on than it’s worth. Some dealers will try to work with the consumer, and by doing that, work the system.
“The dealer might say, ‘I’m going to put an alarm system on your car and fabric protection for $5,000,’ ” Prueter said. “But they give you more than what you owe on the trade-in. They’re inflating the price so it looks like you’re not upside-down on your car. It’s illegal, but they’ll do this.”
Prueter is quick to note that most car dealers are above board, but they need to make money, too.
“You have to be smart when you walk into a dealership,” he said. “This is something people do maybe every five years, and the dealer does it twice a day.”