Avoid These 5 Auto Fees Car Dealerships Trick You Into Paying For

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Jake Arky

Sat, Sep 30, 2023, 7:00 AM 4 min read

The prospect of buying a new car can come with mixed feelings. At first, you might be elated that you can drive off the lot with a new vehicle to call your own. But once you walk through the doors and start the purchasing process, a new emotion might take over: skepticism. Is what’s being offered really what you want or need? Are you being upsold by one of the sales people? Do you really have to sign up for everything they offer?

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The short answer is: no, of course not. Dealerships have a number of extraneous add-ons, fees and costs that you actually do not need and certainly should not pay for. Here’s how to avoid the top five auto fees car dealerships trick you into paying for.

Dealer Preparation Fee

Extras like extended warranties, insurance or the nebulous “prep charges” often come tagged with a hefty markup, as described by Jason Farrell of the Mechanic’s Diary.

“A client recounted how a dealer tried to pad the final price with a ‘fabric protection’ fee for a service never delivered,” Farrell said. “It’s wise to scrutinize the bill closely and question any unfamiliar or needless charges.”

“This is often just an attempt to get you to pay for something they’ve already done as part of their regular sales process,” said Liam Lucas, the CEO Off Road Genius. “Always question any fee that’s not government-mandated or clearly explained.”

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VIN Etching

A dealer might recommend that you get a VIN window etching — this is your vehicle identity number, but it does not have to go on your window. You will, however, be charged and likely overcharged for this service.

“After you’ve negotiated the price, some dealers might try to add on additional services or accessories,” said Abel Duke, the CEO and founder Auto Almanac. “They might present these as already installed and non-removable.”

Instead, try to negotiate to bring down or waive the fee if the car already has the VIN etching. You can also research buying a do-it-yourself kit to easily and cheaply get this service done if you do want the VIN etching while not overpaying for it.

Yo-Yo Financing

One moment your financing is ready to go, the next it’s in the trash. Tomorrow it’s back in the green, only to later nosedive into the red. This…all according to the dealership which has already sold you the car that’s now parked in your driveway.

“Yo-yo financing is a trap that snaps shut after you’ve joyfully driven off the lot,” Farrell said. The dealer lets you take the car, only to ring you up days or even weeks later to say the financing didn’t pan out, and now the terms have shifted, mostly not in your favor.”

Farrell has a tip to avoid this kind of up-and-down, head-spinning financing trap: “Always have a pre-approved loan from an external lender before you set foot in a dealership.”

Extended Warranties and Prepaid Maintenance Plans

The last thing you want to think about after buying your new car is when you’ll need to fix or repair it. The dealership might try to sell you some peace of mind by offering extended warranties on your car. Be sure to read the fine print when they do.

“Many don’t offer much more than the standard warranty,” said Patryk Doornebos, owner of Car Triple. “Research your car model’s reliability. If needed, you can buy third-party warranties often at better prices.”

Should you turn down the extended warranty offer, the dealership might try the next upsell of a prepaid maintenance plan. Oil changes, turn signal repair and other minor upkeep can all be included, but frequently it turns out to cost you more than if you went to your trusted mechanic.

“These might seem convenient but can be pricier than individual services,” Doornebos said. “Check what’s included, and how often, and compare with local shops.”

The Trade-In Trap

According to Farrell, the trade-in trap is when a dealership undervalues a trade-in you bring to the lot. In order to “make up for it,” the dealer ups the price of the car you have your sights set on.

“A buddy once shared how the thrill of a great deal on a new car fizzled when he saw the modest sum offered for his trade-in,” Farrell said. “A savvy move would be to separate the transactions: sell your old car on your own, and then haggle on the price of the new one.”

“Car buying may seem wrapped in layers of complexity, but with a little homework, a touch of patience, and a dose of negotiation skills, one can surely sidestep the financial pitfalls set by some dealerships,” Farrell said.

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