Car buying tips & tricks to avoid hidden fees from dealers

Updated May 31, 2019 | Same topic: Best Advice for Car Buyers
Understanding the hidden fee from the dealership when buying cars will help buyers get the best deal.

Owning a car is expensive. Perhaps, this statement has been accepted as a universal truth. But considering the convenience, some wouldn’t mind paying hundreds or even millions of pesos just to own a car. Aside from the main cost of the car (taking into consideration the model, make and technology incorporated to it), there are other fees to consider when buying a car.

Among the many lines of fees you need to save up for, one is the dreaded dealership fees. Every car dealership may have its own set of dues that consist of a massive amount of a dealership fee. Whether you will buy a second-hand vehicle or a brand new car, you’ll encounter these fees before you can finally get to take your car off the lot.

In this article, we’ll discuss what these dealership fees are and what line item can you negotiate with a dealer. Aside from these, Philkotse.com will cover up some tips and tricks that you need to understand before going right into a dealership center.

1. What are the Dealership Fees?

In the simplest sense, dealership fees are expenses that a buyer needs to pay to offset a dealership's cost in preparing necessary paperwork of the transfer of ownership or other documents, safekeeping this paperwork for future transactions, delivery costs of the vehicle and many more.

In fact, when a dealership presents you with a statement about these costs, you'll recognize these items such as documentation fees, delivery fees, admin fee and many more.

There’s not much regarding the Philippine law that prohibits the establishment of dealership fees. But, as long as you know what these are and you can negotiate what you think is the right amount for each, you’ll inevitably have to pay for those.

hidden fee when buying cars

Be aware of hidden costs when purchasing a new car

>>> Worth to note: Understanding taxes and fees when buying a car in the Philippines

2. Hidden fees to be aware of when buying cars

It is said that research is a vital key in making your car-buying experience a practical and fun moment. Before walking in and committing to a car model you have in mind, it is best to ask help or opinion from your friends regarding dealership fees they had encountered when they bought their vehicle.

This will give you at least an insight as to which dealerships cost more and what goes into their line items. You can also browse the internet or join an online community that spreads awareness and information to each member, you can post a question, and people will help you out with their own experience and level of expertise.

Moving forward, here are the most common line items that'll consist of the over-all dealership fees you'll pay before having a car of your own.

9 fees to NEVER pay a car dealership. Tips on car buying, how to negotiate, and how to buy a car

2.1. Delivery Charge

Some dealerships would gladly take on the task of delivering a vehicle right at the comfort of your own home, all for a cost. Of course, there is nothing wrong with this, especially if you requested it but take one excellent and scrutinizing look over your statement fee.

Most of the time, the destination fee (which we will mention later on) is the equivalent of the delivery charge.

Tips to avoid

If your statement reflected a destination charge (which is an acceptable due) plus a delivery charge somewhere, question the person-in-charge and let them explain the purpose of each. If each item serves the same function, tell them you won’t pay for the delivery charge.

Car purchase receipt

Most of the time, the destination fee is the equivalent of the delivery charge

2.2. Documentation Fee

Most dealerships would argue that this is an essential part of your statement as these costs are related to paperwork and documents of the ownership, licensing and other legal aspects of purchasing a vehicle.

Tips to avoid

Assess whether they are rightfully priced and not a tad expensive. If you have doubts, ask them to explain how they arrived at the computation.

documentation fee when buying car

Assess whether documentation fees are rightfully priced and not a tad expensive

2.3. Dealer Preparation Fee

Person-in-charge will tell you that a dealer prep fee is the overhead costs they incur upon preparing your car for a test drive, changing fluids, cleaning and etc.

Tips to avoid

To put it bluntly, this move is a scam. It is their responsibility as car dealers to prepare a vehicle at its optimal state to attract potential buyer and to close a sale because a vehicle is operating at its best. Stand your ground and firmly explain to them that you’re not willing to pay for this due.

preparation fee

To put it bluntly, dealer preparation fee is a scam

2.4. Extended Warranty

Much like a dealer prep fee, this one is an opportunity for a car dealership to obtain a few hundred dollars from your pocket. Remember, when you purchase a car, it is essential to read and understand the warranty conditions first.

extended car warranty

Extended warranty is an opportunity for a car dealership to obtain a few hundred dollars from your pocket

Tips to avoid

If needed, you have the option to pay for an extended warranty right away or wait until the basic warranty has expired. The thing about this decision is to take your time and evaluate your needs first before potentially spending a lot of money on something you won't need.

>>> Must read: 4 Questions To Ask Before You Say Yes to an Extended Warranty

2.5. Paint sealant fee    

Just like we mentioned earlier, it is crucial to understand line items that you are paying for. Before you hand over that cold cash you earned, make sure you’re not paying for something you did not request to have. Just like this paint sealant fee item.

Tips to avoid

A paint sealant process involves filling up pores and irregular car surface with a sealant to achieve a smooth finish. Although this service add-on is pleasant and beneficial, unless you requested it, you don’t have to pay for it.

hidden fee paint sealant

Unless you requested, you don't need to pay for any car paint job

2.6. Anti-theft protection

Some dealerships would grab an opportunity by offering to add services such as the installation of the anti-theft protection system to your car for a high price. They'll convince you that this is an essential feature that'll result in lower insurance premiums and what-not.

Tips to avoid

If you try to shop around and compare prices for other car dealerships or even obtain a quote from a third-party provider, you may discover that others have a better and cheaper alternative to what your dealership offers.

It is not difficult to purchase an anti-theft device in the market

>>> Read more: Accessories for new cars: Which to buy?

2.7. Rust-protection fee

Modern models and make of vehicles released in the market are built with a rust-proof attribute. Unless requested, do not pay for these fees that can double or triple from price offerings of third-party service providers. If you need to rust-proof your car, you can always search online for the most cost-efficient option you’ll need.

Tips to avoid

It is important to note that some of the mentioned line items of expense discussed above will not appear as itemized as it should be. Some would package the dealership fee as the total of the ones above and if you are looking out to save a few thousand from the transaction, don't hesitate to ask for a justification of the amount.

Remember, you need to exercise practicality and thriftiness especially with transactions that involve millions of pesos. If in doubt, always ask and stand firm with your decision of not paying something that is deceiving and overly-expensive.

>>> Click to get more helpful tips and advice for your car buying.

Author

Hanna Sanchez

Hanna is one of the most competitive swimmers in the country during her day. It was not long before she discovered her passion for the automotive industry as well. Nowadays, she balances her passion through writing as well as coaching.