Dealer Fees Explained

If you have ever bought a new car, you will likely know what Dealer Fees are, and it is very likely that you paid them. They can range from a couple of hundred dollars to as much as a thousand dollars, depending on the dealer. These fees are over and above the purchase price on the car, and have nothing to do with the manufacturer. These fees are basically pure gravy for the dealer, and even the sales person doesn’t get a cut out of them. You see when you buy a new car, the dealer sells the car for a percentage over their purchase price, let’s call this the invoice price. Not the invoice you see as the buyer, but the invoice the dealer buys the car for. Most cars sell for 3-8% over the invoice price and it is our job to negotiate the dealers profit. We can also find out the dealers invoice price on Car Cost Canada, and if we want to get a really good price on a car we should aim for 2.5% over the invoice price - that would be considered a fantastic deal for the buyer! ?However, even though you might successfully negotiate the 2.5% and get all the manufacturer incentives as well, you still might have to pay the Dealer Fee. Keep in mind this fee is not mandatory, and is usually justified by telling you that covers some sort of tire warranty or cleaning the car, and although this may be true, it doesn’t mean that by law you have to pay it, you can opt out of it. It won’t hurt you or your salesperson, as they usually get 25-30% of the 2.5+% of mark up on the car. So bottomline, if you don’t care for tire warranty or need your new car (that’s already clean) cleaned, save a few hundred bucks and opt out the fee. There you have it folks! Tune in next week as we look at more car buying tips. As always drive safe, and keep us in mind for your next service work or when you are looking for a good mechanic to work on your precious imported BMW, Benz, VW etc. We strive for excellence!