Once you have chosen a vehicle and sat down with the finance officer, it is time to begin signing documents. Many consumers are struck by sticker shock when this time rolls around. While the price of the vehicle may be attractive, the amount charged in fees can be considerable. Here's what you need to know about those pesky contract fees and charges.
Dealerships have a well-earned reputation for passing costs along to their customers. If you look at your contract and find advertising fees written in, that were not listed on the invoice, it's time to find a new dealership. These fees are simply the dealership recouping their costs for advertising at your expense.
Dealer Specific Fees
This encompasses an enormous range of different fee types that are all illegitimate. This is yet another example of the dealership trying to make a buck at your expense. Find out before you begin what dealer fees are written into the contract. If Shipping, Preparation, Paint or anything of that nature is present, walk away from the deal (or negotiate it out).
Rebates and Incentives
Most automakers offer cash incentives towards purchasing one of their cars. The vast majority of consumers roll this incentive over to take down the price of the vehicle. However, depending on the state in which you live, you may end up paying tax on this amount. You'll have to find out the laws in your state regarding the taxing of incentives (the dealer can likely tell you).
Various Document Fees
Document fees (document prep, etc) are another place that dealerships can really hit consumers. Before you begin negotiating the price of your new vehicle, ask what the doc fees will be. If they are high, it's time to find another place to purchase a car (many dealerships will knock the price down, if they think you will leave).
These fees have nothing to do with the dealership. In fact, they are charged by the government to register your new vehicle and obtain a new license plate. Newer vehicles have higher registration fees (don't confuse this with the price you pay for an annual car tag, which will be lower).
Sales tax, of course, will be a part of the equation. Knowing what your sales tax is and how it breaks down across your car purchase can help you avoid sticker shock. For instance, some states charge sales tax on rebates and incentives given by the automaker, on top of the price of the car.