Dealer Charges

When buying a car, the sticker price includes not only the manufacturer’s suggested retail price, but also additional dealer charges.  These dealer charges include various items and services that the car dealership charges you for that can increase the price of the car.

Some of the dealer charges are for services or upgrades to the car.  For example, if you want rust proofing, there is a dealer charge for that.  Other similar charges include for undercoating or for a specific paint color.  These should be itemized so that you see the specific cost for each.  A transportation fee is standard in the industry and covers the cost of transporting the car to the dealer.

Other dealer charges are less specific and should be scrutinized by potential buyers.  For example, there is often a fee titled additional dealer markup (ADM) or additional dealer profit (ADP).  This is merely a catch-all fee meant to increase the profit that the dealer makes on the car.  It is certainly negotiable.  Another fee that sometimes appears is an advertising fee.  This is the dealer trying to pass on to the consumer the cost of advertising for the business.  If you do not feel that you should be paying this business expense, tell the salesperson that you want that fee removed, or at least greatly reduced.  Another nebulous fee is the dealer prep fee.  This is the cost to the dealer to get the car ready for you.  Since it does not usually entail much more than removing plastic film from the car’s interior, it does not warrant an expensive fee.

Be sure there is not a fee listed as holdback.  This is actually money that the dealer gets from the factory.  If the dealer charges you holdback, then the dealer is getting paid that sum twice – once from the factory and once from you.

Closely examine the list of dealer fees.  If the salesperson cannot give you an adequate explanation of any specific fee, then most likely it is only there to add to the dealer’s profit.  Certainly the dealer needs to make a profit on any car that is sold, but you also want to save as much money as possible.  Don’t be afraid to argue and negotiate through each of the fees to give yourself the best possible price on a car.