yesrdx

Okay, maybe it's not quite hidden, but some people think it is and the dealerships are evil profiteers of our own business model ignorance.

So, before you buy your car, do a little homework:
https://www.cars.com/articles/2014/0...ealer-doc-fee/
Closing Costs: Are you paying too much?

So before you agree on a purchase price and head on over to the closing table, expect additional closing costs and factor it in. If you don't, you're going to sound like an idiot. And if you did a good job in negotiating, you'll have a hard time discounting any of the closing costs (it's also illegal to charge different amounts in many states due to today's society with their discrimination laws and having their panties in a bunch). You may not know what the closing costs are (you can always ask), but the dealership knows and will factor it in and maintain whatever profit margin they're willing to accept before heading to the closing table.

yesrdx

What did I get in return? A quick and easy loan process. I barely filled out an application with bare essential information (name, address, etc). I didn't even have to provide the dealership with any additional paperwork. The finance department called a local credit union, handled all the dirty paperwork, and I was able to walk out of the dealership with a $40K+ car all within 2 hours.

dirleton

Financing from the dealer. Now there's a shrewd move. And it only cost you $598 in doc fees?

yesrdx

I'm sensing a bit of sarcasm here. What's not to like? I know the going market rate for a 60-month auto finance is sub 2%. I know Acura has a 1.9% financing available for 36 months through Acura Financing. I told them if they can offer 1.9% financing for 60 months, I'd use their services. Finance manager contacted a credit union and was able to beat my offer and gave me 1.7% for 60 or 63 months.

$598 is the lowest from any of the local Acura dealers. Another dealer charged $699.

dirleton

You did well. Hard to believe they "gave" you a better rate than you asked for. Typically, however, the dealer is not a good place to go for financing. It's one of their profit cows, along with warranties, dealer add-ons, and doc fees.

yesrdx

I was actually surprised myself, but it's a well-known credit union and I've heard good stuff about them:
https://www.deltacommunitycu.com/per...car-loans.aspx

Dealerships can be a great place to finance your vehicle. Where else are you going to borrow money for 72 months with 0% interest?

Add ons: again, dealerships are a great place to buy accessories if it's mentioned during your new car purchase. I paid $650 and $500 for the roof rail and sport running boards installed. While maybe it's not cheaper than buying OEM parts from other third parties, I was able to purchase it and have it installed for less than the retail value. Since I'm not much of a grease monkey, it was worth it for me.

Bottom line, treat dealerships like a business partner. Respect their business, and they'll respect you. Treat them like evil scumbags, well ... you get the idea.

Go for the win-win deal.

ceb

States generally cap the amount of doc fees that dealers can charge and there isn't much one can do about it except to calculate that into your purchase.

The dealership still made money from the loan. They either marked up the interest rate (dealers often get .9 under the posted rate) or they got a flat fee for each referral. It doesn't matter much if you get out of it as well - and you did.

There are a few things to consider with accessories. The dealer installs lots of them each week and that allows them to do it much quicker.

There is a good DIY on installing the running boards. To do it right you need to rent a lift and either have, buy or rent some tools. Figure in those costs, the cost of your time and the possible costs for band aids and antiseptic spray and the dealer cost (if, as yeoyes recommends) when they are rolled into the negotiations.

In addition, the dealer installed accessories then fall under the car's warranty so that wobbly running board will be fixed by any dealer.

dirleton

"Go for the win-win deal."


You do seem to lead a charmed life. You get a negotiated price below cost, a finance rate below what you asked for, and a great deal on accessories installed. I would imagine you got above retail market for your trade-in as well. As a public service you might let the rest of us know where you purchased your rabbit's foot. And, for the record, the only person to refer to dealers as evil scumbags, etc., is you.

ScoobyTL

OP,

I believe the dealership that you went to is part of a program called CUDL (credit union direct lending). I used to work for a local credit union and we had to deal with a lot of these types of loans. They didn't give you a better deal, they gave you what was offered by the credit union. Yes, they still made money (flat rate) by referring you but they would have made more money if you financed through Acura.

What I use to tell people is that, if you don't like working with the sales person get a purchase agreement and come back and we will write you a check. Dealerships hate this because they don't make any money off of it.

Anyways, congrats on the low rate and having fantastic credit!

othermike

Hardly necessary for the buyer to worry about the dealer's side, since they are in business to make a profit. They're not going to sell you a car unless it's making money for them somehow. If you're lucky enough to be their last buyer at the close of a factory sales incentive program, they might sell you a car at a "loss" but then more than make up for that small loss with a big bonus for hitting their sales goal. So I guess that would be a win-win: you get a car below cost and you get to brag to your friends about the deal you made, while the dealer smiles all the way to the bank. We should all be so lucky!

Here in Illinois, state law limits the dealer doc fee to $168.43 currently, with a small annual escalator for inflation. Some dealers try to add profit back in at the close by claiming that one or more accessories are "mandatory." For example, the sales guy will say that the dealer requires every car to be sold with wheel locks, or something similar. The sight of the buyer getting up to leave with no deal done seems to take care of this.

Desert Ridge

Nothing makes my blood boil like hearing a closer say, "all dealerships charge this fee, and all buyers pay it."

I have gotten up from the table after hours of negotiations and said, "do you want to sell this car, or not?" I'm not going to pay that fee."

When I go to buy a vehicle, I have a clear title in hand. All I have to do is sign it to transfer my vehicle to the dealer. If they want $500 to do the title on the new car, then I want $500 for my signature. Works every time.

I have come to realize that new cars do not have any title at all. They are "untitled." So, the dealer wants to pass their problem onto the buyer. I really wish more buyers would stand up to this. It wouldn't get so ugly when I put my foot down if others did the same.

ceb

Most dealers won't budge on the fees so that they can say "every buyer pays that fee" - but - that doesn't mean that they can't subtract it from the cost of the actual car.

I don't pay the fee either but it is a line item on every invoice I've signed. If I've negotiated a "price to include all costs excepts those required by law (tax, tags and title)" of $10,000 then I don't really care how they've broken it down. If they sell me the car for $9000 with $1000 in fees, that's fine with me. If they want to write it up as $1000 for the car and $9000 in fees that's OK too - as long as the bottom line is our negotiated price.

dirleton

They can't remove the fee from the purchase agreement. As soon as they charge it once they have to charge it every time or leave themselves open to discrimination lawsuits. And, as noted above it doesn't matter so long as the customer is aware of the fee and takes it account when negotiating. It's the poor unaware schmo who has it sprung on them in the business office that suffers. And there are lots of poor unaware schmos out there - the dealers know this and prey upon them.

ScoobyTL

There are a lot of uneducated buyers out there. I once had to help someone refinance their car because they were paying an interest rate of 19%! The monthly payments were kept low because it was stretched to an 84 month loan.

dirleton

That's another dealer trick to avoid: "What kind of payment are you looking for."

ceb

The modern version of that is "I can move you from your current beater to a new superdupermobile with your same monthly payments." What they fail to tell you is that you'll be paying on your new car for the next 25 years.

The average car loan has now grown to 72 months. That's 6 years. What they don't tell you is that you'll be upside down for about 5 of those six years.

Dealers will do almost anything to hide the true cost of the car. They'll use the 4 square, monthly payments, cost subtracting your trade, cost subtracting a fictional downpayment and anything else they can think of.

They love to try to add the destination fee in twice and ANY math "error" is always in their favor.

I'd rather pay a few bucks more and deal with a (somewhat) ethical dealer.

dirleton

"I'd rather pay a few bucks more and deal with a (somewhat) ethical dealer."


How often do you travel to the North Pole for the purpose of buying a car?

ceb

Some are better than others. At various dealerships I've said "treat me like an idiot once and I walk out the door. Play games and I walk out the door". By this time I've done my research AND I've gotten quotes from the internet guys

yxc145

so if I got the loan already on my own, ready to pay the dealer (pretty much like a cash deal), I don't have to pay this doc fee?

ceb

You ALWAYS pay the doc fee. Their excuse is that there are lots of documents they need to fill out that cost time and money. The doc fee has nothing to do with how you pay. All it has to do with is dealer profit.

yxc145

what if I offer to register the vehicle, pay the sales tax at the local DMV on my own. Do they still have an excuse to charge me? Just curious.

ceb

They will ALWAYS find an excuse. The excuse is as simple as "we charge everyone the doc fee". See post "13 in this thread.

They still have to fill out the invoice. That's a "document".

Face it. It will be on your invoice and you can negotiate the cost of the car lower by that amount but you will have it on your invoice.

dirleton

It's a fact of life. You're lucky they don't try to charge you a "convenience" fee for coffee in the waiting area and toilet paper in the restrooms.

dirleton

"Some are better than others. At various dealerships I've said "treat me like an idiot once and I walk out the door. Play games and I walk out the door".


I'm surprised you were in a position where you might have to walk out the door or let them try to play games. The only reason to be in a dealership in the first place is to pick up the car. Everything else e-mail, phone, fax.

yesrdx

For me, it'd be too much of a hassle.

yesrdx

No trade in. It's a business deal. I leave emotions out of it and hope everyone can benefit like any other business transaction.

KeithL

Here in Georgia doc fees are a way of life. They run $599-$799 and I have never seen a dealer budge on them, but I leverage that making sure I let them know that is pure profit. I usually get cars for invoice or below. Sure the dealer gets some hold back and other incentives, but let's face it, they are in business to make money. The Internet has had them have to stay sharp and creative as many buyers know what invoice price is what incentives are available. I want my dealership to remain profitable becaus if they are not then customer service typically will suck. That is not to say that profitable dealers will have good customer service, but I tend to buy a lot of cars and building a decent relationship is important to me. If you squeeze them to the point of crying then when you need them they won't be there for you. I have had a few things where the dealer has gone out of their way to help me.

When we bought a used car from the Acura dealership a few years ago for my gf's daughter the car had an issue pop up a few months later that was out of all warranties. Went to dealer talked to them and they covered the repair on them. What helped was I had bought 5 cars from them. When we bought the gf's RDX 2 years ago they trucked the car in we forgot to make sure they got it from a state without a front license plate. RDX came in with front license plate. Told dealer I was not happy, but realized we had not made it clear. They offered to swap bumper with another RDX without any hassle.

I want a good deal and will fight for best deal possible, but I want a deal that is at least fair to the dealer if I ever think I want their help for something, especially when you look at how bad ACS is so the dealer is your best way to getting things resolved.

dirleton

If the dealer makes the deal he is perfectly OK with it. They do not make deals they can't live with. New car sales are typically a very small part of their profit stream. NEVER feel bad about squeezing a dealer as best you can.

KeithL

But you need to remember the sales person, they get paid based on the deal not the overall dealer revenue stream.

dirleton

The salespersons financial health is not my concern. They pretty much always make at least a "mini" on the deal. They will be perfectly happy to gouge you if given the opportunity.

KeithL

Correct they will gouge you if given the opportunity and even the ones I have relationships with realize I will double check their offers.

Murrow

Instead of being "sharp and creative," they could try just giving an upfront, honest, bottom line price right from the beginning. Stop playing games, or at the very least, disclose the dealer fee very, very early in negotiations, but that never happens, unless the customer specifically asks. Instead, they tell you they're "making $200 on the deal" and then they hit you with the dealer fee at the last possible minute.

Dealer fees are not government fees or taxes -- they're pure profit. Just roll the $599 (or whatever it is) into the price you give the customer and stop wasting everyone's time. If the dealer is only willing to sell the car at MSRP, that's fine. It's their car and their decision. No one's forcing the customer to buy anything. But don't tell me you're selling the car for $599 under MSRP and then hit me with a $599 "dealer fee." It's incredibly disingenuous, and somehow, it's become acceptable commonplace.

If dealers don't want to have the reputation of dishonest, lying dirtbags who can't be trusted, they should stop like acting exactly that way.

KeithL

I am not defending dealers, but marketing and human behavior have a lot to do with things. It is like many things, most people are clueless on certain things and marketing departments are masters of human behavior and exploiting that.

yesrdx

It's a negotiation game. Don't like it? Go buy a Scion. You don't like the limited selection? Go to Carmax. Dealers have to deal with scumbag customers everyday, so I see it going both ways. Don't hate the player; hate the game.

KeithL

Agreed, the game sucks. I read that Lexus is going to try the Saturn pricing model at some dealerships as a test. Basically no haggle pricing. Be curious to see how that goes. Hard to change the perception and practice of the public after years of the current game.

yesrdx

Now that you mention it, I remember reading about this in a news article about a month ago. What's interesting is that it won't be nationwide but limited to a few dealers, so I'm also curious to see how this goes.

Lexus Will Experiment With No-Haggle Car Pricing ? Consumerist

dirleton

It's a good thing for those who find the grind particularly distasteful, and that covers LOTS of people. It also leads to claims of "The best possible price" which is, of course, a large pile of steamy hot BS. Several dealers in my area tried and discontinued when they discovered they were missing out on the "Got to have the red one" type of MSRP buyer.

othermike

+1 Since dealers are independent businesses and free to set their own prices, it would be easy for local non-participating dealers to undercut that "best possible price" to bring in customers, then work them for every option and pack they could to push up their gross on each sale. That would cost the participating dealers some sales and torpedo the "best possible price" claim as well. So there can't be much incentive for a dealer to participate in one of these trials unless the factory offers some kind of cash support. I don't see this kind of program ever succeeding as a limited trial.