Hidden Fees – Do I really need to pay them?

We all know the drill.  After you’ve agreed on the price of the vehicle you see the words “+ tax, title and fees”.  You know what the sales tax will be, but what are the other fees?  Do I have to pay them?  This article will explain what some of the typical fees are and if you have to pay them.

Sales Tax

Pay it? – Yes.

Each state requires that the sales tax (7% in Indiana) be collected by the dealer.  No way around it.

Doc Fees

Pay it? – Yes, within reason.

Every dealer will charge you a fee to handle the paperwork.  States have different regulations on how much they can charge, but don’t expect them to lower the fee for you.  You can, however, ask them to lower the selling price by that amount.

Destination Fee

Pay it? – Yes

This fee is listed on the invoice and isn’t negotiable.  It’s the amount the manufacturer charges the dealer to transport the vehicle from the factory to the dealership. 

Regional Ad Fee

Pay it? – Yes

The dealers will pool their resources to advertise in various regions.  This is often listed on the invoice and isn’t negotiable.

Title Fees

Pay it? – Yes

Each state requires that the vehicle has a title and this fee covers the state processing charge.

Vehicle Prep Fee

Pay it? – No

Some dealers may try to charge you to unwrap and clean up your vehicle before you take ownership.  Don’t pay for this.  Truecar.com compared this to paying an extra fees to slice and wrap your sandwich!  Ask for the dealer to remove this fee before moving forward.

Funny Letter Fee

Pay it? – No

If you see any acronym followed by a fee, question it.  If it’s not related to one of the above fees, don’t pay it.  Ask the dealer what it stands for, you might get a good laugh once they explain it, but don’t pay it! 

A good rule of thumb to follow is that if it’s not listed on the invoice or is a state mandated fee, don’t pay it.  Many of these fees can pad the total cost and you should always ask why they are there.  If you don’t like the fee, ask for it to be removed before signing the paperwork.  It’s your money until you sign everything, so be informed and in charge.

New Model Year Confusion

As we inch closer to 2012, you have no doubt seen car commercials for the 2012 models.  Many of these commercials started in the summer of 2011.  That’s like celebrating Christmas in July!  Virtually all of the major manufacturers will release their new models before the current year is over.  This started as a way to generate hype and interest in the new cars before they arrived.  Now it has become a nearly year-round event.  In fact, Lexus has announced they will release their new 2013 GS model in January or February of 2012! 

So with all of the confusion about model years beginning and ending, how can you keep it straight and benefit?  Thankfully there are several options.

#1 – Watch TV! 

All of the major manufacturers want to clear out the 2011 models before the 2012 models arrive.  So they will be advertising specials and incentives to clear the lots.

#2 –Check their websites

The manufacturer’s websites will list many of current offers on their vehicles.  They are sure to list clearance sales and special events.

#3 – Online research

Many of the websites I listed a few weeks ago (click here for the article http://indyautoshopper.blogspot.com/2011/08/10-great-online-car-resources.html) will post updates on model clearance sales and which ones are offering the biggest discounts.  They will also tell you the changes occurring between the models. 

One word of advice.  As you’re looking for deals on last year’s models, be sure to check if the new model will have any significant changes.  The models that don’t have a big change will retain their value better than those with big changes or an entirely new design.

So as we approach the typical end of model year clearance time, be sure to keep an eye and ear out for specials and do your research.  There are some great deals to be found if you do your homework.

Quick Discussion on Electric Vehicles

It seems that a new report appears every day on electric vehicles (EV).  Most are touting them as the savior of the car industry, but that may be a ways down the road.  Until we get the infrastructure established and the range increased, most people will shy away from owning or driving an EV.  The primary reason is range anxiety.  People are worried, rightfully, that they will run out of battery before they return home.  Because charging stations aren’t widely available, they would be stuck and require a tow home.  It’s not possible to walk to a nearby gas station and buy a small charge to get you home like you can buy a gallon of gas.  But what if this changed?!

A company located in Indianapolis is looking to make this happened.  Real Power (www.realacpower.com)  is working on a prototype “tow truck” that would be able to refill your battery.  They have designed a flat bed tow truck with a built-in generator.  The DC power can connect to a level-2 or 3 quick charge port on an EV car.  Using the level-3 setting, the company claims they can charge a Nissan Leaf from empty to 80% charge in 30 minutes!  Anything over 80% would damage the battery, so they stop there.  This would be more than enough to get you home and back to you normal charger in the garage.  They use a flat bed trailer in case there is something else wrong and they can just load up the car.  (See the full review at http://blogs.cars.com/kickingtires/2011/07/carscom-field-trial-mobile-ev-quick-charging-.html).  

So what happens next?  Well, Real Power is working with dealerships, states and towing companies to gauge the level of interest.  States might like to use it to encourage drivers to switch to EV cars by eliminating some of their range anxiety.  Keep your eyes open because you might see one of their trucks on the side of the road helping a stranded EV driver.

I’m curious, what keeps you from buying an EV?  Is it the price?  Range anxiety?  Performance?  Space considerations?  Tell us what’s holding you back from making the switch to EV.

Andy w/ Indy Auto Shopper

Car Buying Trends That Will Benefit You!

This week I wanted to note some recent trends that will benefit you, the car buyer.

1)      Toyota is #3 in overall sales

The tsunami in March caused problems at Toyota for many months.  With a decrease in supply, dealers were hesitant to sell what they had for fear that no replacement vehicles would be coming.  Now that Toyota has fixed the supply issues, there is a suitable amount of inventory to allow the dealers to discount their prices.  In addition, Toyota is currently offering incentives such as low APR, cash back and lease deals.  While this is common place for the domestic manufacturers, Toyota typically refrains from offering large incentives.  Toyota wants to regain the #1 position and the only way to do that is to sell more cars!

2)      Model year close-out for 2011

As car companies roll out their 2012 models, they want to move the current 2011 models.  This will lead to significant price cuts on cars currently on dealer’s lots.  The dealers want to make room for 2012 vehicles, so they will be more willing to sell what they have at a reduced price.  Hint:  Wait until the end of this month to really get a good deal!  Not only will many of the 2012 models be out, but dealers always want to meet their monthly sales targets.  It’s a win-win for you!

3)      Volkswagen’s quest for world domination

The Volkswagen group has made it abundantly clear that they want to be the #1 auto manufacturer in the US and world.  However, they are currently #8.  That’s a huge jump to make.  They plan on making cars more attractive to US buyers with features that we demand.  A fear that many fans of Volkswagen have is that they will lose track of the essence of what makes a Volkswagen.  We’ll have to wait and see if that happens.  Right now you can get their cars with all the trappings of a Volkswagen and get some good incentives at the same time. 

4)      Used car prices may have peaked

This spring and summer we heard all about the price of used cars and how high they were.  Well it now looks like the prices are starting to flatten or even drop a little.  But in the run-up, many dealers purchased too many cars and will be looking to off-load some inventory soon.  The deals won’t be amazing, but they will be better than they were in the previous few months.  The key will be to shop around and determine how long the car has sat on their lot.  The longer the car has been there, the more willing the dealer will be to negotiate.

All of these factors will help you the buyer when you go to purchase your next car.  Now we just need to get more money in your pockets so you have some to spend!  But this is not a blog for politics, just car buying. 

Happy car shopping!

Andy with Indy Auto Shopper