The phrase “dealer fee” has become a generic term for all the hidden fees that car dealers have added to the advertised prices of their cars for the last 50 years. When I started in the car business with my father in 1968, Stewart Pontiac in West Palm Beach, FL charged a $6.50 fee named “doc fee”. I guess my father chose “doc fee” for this hidden profit because it sounds like an amount that would be charged for processing documents. I never gave this a second thought, because the fee was quite small, and all car dealers had similar charges.
Today dealer fees have surged in amount and number of fees charged on a single sale. A few states regulate the fees effectively like California which caps theirs at $80. Most states have NO LIMIT on the amount. Florida’s is one of those and their average dealer fee, according to Edmunds.com, is $799. But in South Florida, dealer fees exceed $1,000 on the average and some dealers have as much as $3,000!
The first thing you need to know about dealer fees is that almost no car dealer names their hidden fee “dealer fee”. All dealers have come up with legitimate sounding names designed to make the car buyer believe the fee is a government fee like sales tax or license/registration. A few examples are tag agency fee, electronic filing fee, e-filing fee, administrative fee, doc fee, notary fee, dealer prep fee, etc. In fact, some dealers advertise that they don’t charge a dealer fee, because they can say they named their “hidden fee” something else.
Secondly, you may not even be aware of their hidden fees until you are signing the final documents in the dealer’s business office. In your mind, you’ve already bought the car. The salesman’s job is complete, and you’ve signed some paperwork. The salesman escorts you to the “business office” to finalize the paperwork. This is where the hidden fees often first appear, mired in the rehems of paper and fine print spit out by the highspeed computer/printer. Most car buyers never know that additional dealer profit was added to the price they “thought” they paid for the car.
Hopefully, the above explanation of how difficult it is for you spot all the hidden fees and the total amount is well understood. The purpose of this article is to relieve you of even having to attempt this almost impossible task. Even if you did find all the hidden fees, you’ll never win an argument with the salesman or sales manager on their legitimacy. In fact, many salesmen and manager have been misinformed by their superiors and may believe that these fees are commonplace, legal, and even ethical. When you argue with a salesman about taking off the hidden fees, he knows that his boss won’t allow it, and he can only make you happy by reducing the price of the car by the amount of the hidden fees. Reducing the price, reduces his 25% commission. Taking off an $800 dealer fee off the price of the car costs him $200 in commission.
The solution to the “hidden fee game”, is to refuse to play. Let them give you bottom line price that includes as much in hidden fees as they want to. That’s when you tell the salesman and manager, that you going to take that bottom line price to at least three other car dealers, his competitors, and see if they can offer you a lower one. Their only choice is to decide how high an out-the-door price they can give you and have you come back to buy from them. You must remember that the definition of an out-the-door price is the amount of money you can write out your check for, hand it to the salesman, and drive your new car home.
Don’t fall for the old tricks…” this price is good for today only”, “the car you chose will probably be sold when you come back”, or “I won’t give you my best price in writing”. When you hear these sorts of remarks, simply say “If I leave here without your lowest out-the-door price in writing, you might sell me a car’. If you don’t give me this price, you have zero chance of selling me the car because you’ll never see or hear from me again”. At his point, you turn around, walk out the door, get in your car and drive away. Nine times out of ten, they’ll give you the price you asked for. You might even have to get in your car, start it, and begin driving away. Be sure to check your rear-view mirror for a salesman frantically chasing behind you. 😊