New Car Closing Fees: What You Have to Pay and What You Don’t

The price of your new car is high enough. And beyond the sticker price, you’ll be charged all sorts of closing costs and fees. Some of these are unavoidable, but others are unfairly added by the dealership in pursuit of additional profit. To protect yourself, know the fees you have to pay and the ones you don’t.

new car closing fees
Image by Emilio Labrador

What You Have to Pay

Delivery Charge

The delivery charge is what the auto manufacturer charges for delivering your car to the dealership. You have to pay it, but you should only pay one delivery charge. Watch out for a second delivery charge added by the dealership; that you should not have to pay. It might also be called a destination charge.

Title and Registration Fee

The dealership will handle getting you a title, registration, and license plates from your state’s motor vehicle department. This is a fee you have to pay, and it is set by your state. To avoid paying too much, find out what your state’s fees are before you buy.

Documentation Fee

This is what the dealership charges to handle all your paperwork with the state. The state limits how much they can charge for this. If you’re charged more than $100, however, contest it, and try to negotiate a lower fee.

State Sales Tax

The state determines the sales tax percentage. It varies by state, however, on what you pay sales tax. You will either pay sales tax on the full cost of the vehicle, or you’ll pay it on the cost to you after subtracting any down payment or trade-in value.

What You Don’t Have to Pay

Dealer Preparation Fee

When a car is delivered to a dealership, it has protective coverings that need to be removed. Usually an auto manufacturer pays the dealership to do it. You should never have to pay for this.

VIN Etching

The dealership will offer to etch your car’s vehicle identification number (VIN) into the windshield, which can help protect you in the case of theft. It’s unnecessary, however, to pay for this. You can actually do it yourself with a kit that costs around $25.

Paint Sealant

The dealership will offer you paint sealant that’s supposed to protect your car’s paint and make it look even better. What they’re actually charging you for is an expensive wax job, so never agree to it.

Fabric Protection

In the same way they offer you paint sealant, a dealership will offer you fabric protection. Again, refuse it, because they are really just over-charging you for Scotchguard.

Rust-Proofing or Undercoating

The dealership may offer this service to protect your car from corrosion and rust, but it’s unnecessary. Cars today are manufactured to hold up well enough on the road without it.

Credit Life Insurance or Disability Insurance

These insurances are offered by the dealership to protect your family, you, and your car if you either die or become disabled and can’t pay your car payments. It’s too expensive to purchase this directly from the dealership, and you may already have disability insurance from work; you can also buy it elsewhere.

About the Author: Dan Smith works in >Nissan Sales for a living and has a good deal of experience when it comes to closing fees. He loves to write and often generates content in order to help people get the best deals possible on new or used cars.

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