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.