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Advertising Fees

yorickshedyorickshed Member Posts: 2
I was wrestling with a Mistibushi dealer today
(smacking him around with my Edmunds-provided
information) and he countered with the following:
Edmunds doesn't account for a variety of dealer
costs like advertising fee (3% of base invoice px),
sales promo fee ($100 per vehicle), and dealer
flooring assistance (1% of base invoice). I gotta
admit, I don't recall hearing or reading about
these charges. What's the deal...are these charges
legit or have dealers invented them to counter the
information that consumers now have?
«13456712

Comments

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    WillyCWillyC Member Posts: 2
    Could someone possibly tell me how to find what
    percentage a dealer should be using against the
    base dealer invoice price in Maryland.
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    WillyCWillyC Member Posts: 2
    Please send email to gmewshaw@erols.com
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    verchoeverchoe Member Posts: 2
    I am not an expert but boy does that deal smell bad! They want an additional 4% +$100 over whatever deal you finally negotiate. What a crock! Run and run fast. A toyota dealer here advertised corolla LE's at .89% over invoice. No additional dealer fees or advert fees. These all sound like a way to make you feel like you have no choice but to pay their fees. You ALWAYS have a choice and they can always get rid of the fees. They may not want to make a sale that bad but they could drop the fees if they wanted to.

    Also don't feel bad about cutting dealer profit to a minimum especially on new cars. I read that a lot of dealers can actually run their new car sales department at a loss each year because their used car department and service departments have such huge yearly profits.
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    czizcziz Member Posts: 1
    I am considering purchasing a new plymouth voyager. The dealer invoice lists two "advertisement" fees which they say are mandatory costs to the purchaser. Is this a legit cost or is it negotiable?
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    yorickshedyorickshed Member Posts: 2
    Advert,

    From what I've read, and from Verchoe's response to my initial post, it appears that these costs are real. More specifically, they are costs that the dealers encounters to run their business. I'm convinced that these costs are now becoming part of the "sticker" because consumers have become so much better informed about car pricing. When the dealer was walkin away with a few thousand from each sale, they probably didn't see the need to explain all of the costs that make up their "overhead". Now that the buyer knows all about incentives, rebates and holdbacks, the dealers feel compelled to even the score by tacking on any cost they can possibly associate with the car. I feel very strongly about these costs, and I'll make every attempt to negotiate them. My feeling is that any cost the dealer incurred that actually added value to the car is a legitimate cost. Any cost related to their own overhead is not my problem. (Its the equivalent of me telling the dealer that I spent 25 hours researching new car information and prices. At my billable rate of $100 per hour, that entitles me to a $2500.00 price reduction on the car I purchase.)
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    alexalex Member Posts: 1
    Looking to purchase a new 98 vehicle and was told
    by the dealer if I placed an order he would be able to sell the vehicle to me for 100 over dealer invoice. Well when I walked in to the dealer armed with Edmund's invoice price, he took back his offer. He said I failed to include destination charges, advertising fees, blah, blah.
    I had everything calculated but the advertising fees. But if I'm ordering the vehicle should I have to pay for advertising, and if so how much
    should I expect to pay? I would appreciate some
    help. Please e-mail at acmedia@earthlink.net
    Thank you.
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    verchoeverchoe Member Posts: 2
    Exactly! Couldn't have said it better. Don't let them them tell you that those fees are "mandatory". Nothing is mandatory. They could sell the cars at less than invoice and waive the freight charge if they wanted to. They won't, but they could. Just approach it from the angle that EVERYTHING is negotiable. If you just accept that those fees are fixed and that you have to pay them , then you have given up that much bargaining room.
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    michellemmichellem Member Posts: 1
    I encountered the same thing with the advertising fees. I negotiated with the fleet manager to buy a Pontiac Grand Prix for $500 over invoice. He built up the car on his computer, and the invoice matched Edmund's EXACTLY, except for an extra $251 advertising fee, which is exactly 1% of the MSRP. He claimed that is a real cost to the dealer. I had negotiated with other dealers and none would even come close to the price I got. He told me that they have to pay Pontiac that fee. There were no other additional fees, and destination was included in the invoice. So I guess that in lieu of paying the advertising fee, I could have negotiated paying only $250 over invoice. But after doing a lot of research, I think I got the best deal possible. Even in the Edmund's fair price guidelines, they suggest including 1-3% for advertising on top of the 5% over dealer cost.
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    jdemariajdemaria Member Posts: 1
    I'm in the process of buying a 1998 Camry LE with
    a dealership in the Charlotte, NC area. We agree on
    the dealer invoice costs (which I got from
    Edmund's, Thank You) except for 3 additional items
    as follows:

    $300 advertising fees
    $181 floor plan fees
    $350 Southeast administrative fees

    They claim this is part of their dealer invoice
    and thus I should pay for it. I say they should pay
    for these out of the profit (4% over invoice not
    including these fees) I'll pay them. Any advice?
    Should these types of fees be included in "true"
    dealer invoice?
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    guitarzan1guitarzan1 Member Posts: 13
    Advertising is legit, assuming they are charging you the actual cost. Floor plan? I think that is a cost of doing business. They want to charge you for their rent. Isn't that included in the car price? I think so. Finally, administrative fees? Sounds the same as document fees. I would try to have those waived. But, first ask what those fees cover, before you hammer them with "Why should I pay for retiling of the dealership bathroom?" Get my drift?
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    atl95148atl95148 Member Posts: 1
    I got a Camry LE V6 only $250.00 over the invoice. The dealer invoice is same as Edmund Web site and added $350.00 the advertising cost.

    I think I am happy with the deal.

    Anthony Le
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    shiftrightshiftright Member Posts: 3
    You know, it's the old story here...offer them what you want to pay, and walk out if they refuse...they may call you later that day, and if they don't, then it's your turn to hit the ball.
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    GregAndersonGregAnderson Member Posts: 2
    That's right. Don't pay a dime in advertising fees. They're not your responsibility. The dealer will try to charge them, of course, but you can always go to another (more reasonable) dealer.
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    gwahlgwahl Member Posts: 2
    I have bought or helped buy 3 cars recently. Every deal included ad fees (1.2%). The cars were popular and the buyer was willing to pay it. If you don't want to pay it just say so, if they want to make the deal they will waive it, if not, shop around to other dealers. Don't take it personally, it's only business.
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    buyvanbuyvan Member Posts: 1
    I am beginning the process of replacing a MiniVan in 98. I have started to look at prices and other fees. I am some what perplexed by the information on Prices and Fees as described by Edmunds help guide. Primary that a buyer should add advertisement fees, Transportation and dealer prep charges. The confusion is that according to the FTC all these fees and charges are included in the dealer invoice. I don't want to be taken to the cleaners by any dealer, so any help is appreciated.
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    guitarzanguitarzan Member Posts: 873
    No Greg, you may not always go to another dealer. Let me put it this way from an avid Acura fan: 2 Dealerships within a one hour drive.
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    alcoalco Member Posts: 1
    My wife and I were going to order a Mercury Villager from the Ford dealership in Freeport, Ill., and were told they would sell us that vehicle at invoice. Well, when my wife went to place the order, they added a $250 advertising charge, which we balked at, and then walked out. We fretted for a while because we thought we made a wrong choice, only to buy a Windstar via Auto-By-Tel from a Madison, Wis., dealer for almost $500 under invoice, and no advertising fees. I look at advertising charges as just another way to bilk the consumer and refuse to pay them-even it means walking or buying a horse and buggy to get to work.
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    tgoebeltgoebel Member Posts: 1
    I am also confused about the Advertising Fee. Is it included in the dealer invoice, or is it added after you negotiate your best price along with the destination charge and filing fees?
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    guitarzanguitarzan Member Posts: 873
    A straight forward dealer, like I just dealt with, negotiates a total cost for the vehicle. They listed the shipping charge, options, and everything else. So I knew what I was paying. Acura doesn't add advertising charges, they are included in the vehicle price.

    The unscrupulous salesmen may negotiate a price, then try to tack on the fees. At that point you make it clear that your offer included the fees, and go from there.
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    mecmec Member Posts: 3
    Today we had a salesman at the Dodge/Plymouth dealership tack on not one but two advertising costs. He was trying to say that they the cost of a new van would be $98 over invoice with $210 and $230. It looked to us like the total they used to tack on for "Dealer Prep." We plan to go to another dealership.
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    mecmec Member Posts: 3
    A local dealer here wanted to charge two advertising fees -- both for Portland area -- we live near the Canadian border. The salesman also gave us inflated invoice prices. Obviously we will buy elsewhere.
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    thlthl Member Posts: 1
    At Dodge dealership we visited recently, the dealer told us that she would sell us the truck we want for $200 over invoice. When we double checked the figure we found that the dealer added an advertising fee of $285 to this cost. The dealer explained that he has to pay this fee on every vehicle that he gets from the manufacturer. Is this information correct? Should we be expected to pay this fee? Or is this another ploy to make more of a profit? Is this fee applicable if we place a special order? PLEASE HELP!
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    CarMan@EdmundsCarMan@Edmunds Member Posts: 38,514
    There shouldn't be any difference in the price of the car if you order it or if you take delivery right off of the dealer's lot. Personally I have a problem with paying advertising charges. It is another way for the dealer to make more profit on the vehicle that he is selling you. Although, I do have to say that at $200 over invoice it sounds as though you are getting a pretty good deal on a Dodge truck even with the advertising fees added in.
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    patejdlwjpatejdlwj Member Posts: 2
    I recently had a similar experience in purchasing a 98 Malibu. Beneath the $525 destination charge on the dealer invoice(which I actually saw) was a $187 fee from 'Chevy' for advertising (Chicagoland dealers.

    Curious! Is this, as well as the destination
    charge, a true fee or a 'soft charge' that the
    manufacturer uses to help the dealer negotiate? I
    presume that there are other rebates and incentives to dealers not discussed on these pages. I know darn well this dealer wanted to dump their allotment of Malibus so they could pick-up more Corvettes, their stated target market. Their profit margin is much greater on the 'Vete, due to demand, and you'd be lucky if you can get one at 100 over sticker let alone over invoice. My deal is done! I like the car and after all, what percent of $18000+ is $187 anyway. I guess I'd really like to find out what costs are soft and negotiable and what costs aren't, realizing the dealer has to eat. ).

    By the way, for those doubters, the invoice elements reported by Edmunds were absolutely accurate in my case.
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    BrutusBrutus Member Posts: 1,113
    jdemaria,

    I just ordered a Ford SuperDuty 4x4 pickup. The advertising costs were $75, which I believe Ford may charge the dealer for national advertising, and $24.80 for gas. Both cost seemed reasonable. The advertising charge may be more for your dealer, but considering the other charges for flooring and admin fees, I suspect your dealer has even padded the ad cost. I am buying my truck in another state, which necessitates the dealer drafting additional paperwork so I can register my truck in my current state and pay my local taxes rather than his state's taxes. I am only being charged a $39 documentation fee. The dealer made it clear that this is an extra cost for this service and is not part of the factory invoice. It sounds like your dealer is trying to pass through the cost of doing business and calling it part of the invoice costs, which enables him to make his "price over invoice" deal seem more attractive. It still may be a good deal, but you can't be sure unless you shop and compare.
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    CarMan@EdmundsCarMan@Edmunds Member Posts: 38,514
    William, Chevrolet dealers do have to pay a certain amount of money to their local Dealer Association to help pay for advertising in their specific region of the country. Whether or not you let them pass this charge on to you depends on how well you negotiate and how rigid the dealer is. If you drive a hard bargain dealers will sometimes waive this fee for you.
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    mirthmirth Member Posts: 1,212
    Here in Michigan it's $350. I just bought a Maxima.
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    ARPARP Member Posts: 1
    Why should anyone have to pay for advertising fees? Advertising benefits the dealer and the manufacturer, because it brings in more customers. They are getting a return on investment for every dollar they spend on advertising, even if they sold the car at close to cost. If they did not spend a dime in advertising, I may not even be there trying to buy a car to begin with.
    Floor plan fees and southeast administrative fees ? They want you to pay for the architect who drafted the floor plan of their building and for being a resident of the southwest -- This is going to be the joke of the week at work – Next they will want you to pay for the gas their cars used to get to work that morning. You do have to give them credit for originality though.
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    hershey5hershey5 Member Posts: 1
    I too refused to pay the $200.00 advertising fee at the Toyota dealer. He removed it from the price. I tried to convince him to remove the Holdback fees as well. I explained that these fees were given to the dealership by the Toyota corp. for selling the car. I asked why that should be a "charge" to me? He wouldn't budge on those.
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    MaryjoMaryjo Member Posts: 1
    Hooray to Hershey5 for refusing to pay Toyota's $200 advertising fee. Also, Anthony Le, I don't know what part of the US you live in, but based on my shopping, I think you got a GREAT deal on your Camry LE V-6. $250 over invoice is a WOW! Advertising at $350 lower than what's being quoted by dealers in the Philadelphia area - consistently $400, and these dealers won't move! I'd like to know how you're doing it. Everyone I know who've bought Toyotas lately has told me they had to pay the $400 ad fee. And most dealers won't sell a Camry for less than $600 over invoice (3.24% on the 4cyl auto LE Camry). These dealers are also insisting that the $400 ad fee is included in their invoice! It seems to me they've got a good car; they know it and are playing very hard ball!
    Maryjo
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    JOEMARRJOEMARR Member Posts: 1
    I am looking to purchase a new Chrysler 300M.
    Invoice on car alone is $25,942. The dealer is telling me there is a $514 advertising cost. Is this legitimate? How can I get around it?

    HanaMaui
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    nhamawinhamawi Member Posts: 5
    $514 advertising seems very high, but they certainly do pay regional and private advertising fees. I can't believe it would be more than $100 to $300 per car. The truth is that they don't make a profit until they pay for heat, electicity, rent, advertising, etc.

    I'm surprised some people try to get the holdback too. If you got that, the dealer would LOSE money by selling the car.

    Be careful about getting excited over paying at or near invoice price. You may be missing something--such as a dealer rebate, customer rebate, and a loyalty rebate. All three are in effect for most Chryslers. I got my 98 Jeep Grand Cherokee for Invoice minus $1000 dealer rebate (now it's $1650!) plus $300 advertising. If I only waited a few weeks, I could have had a loyalty rebate as well.

    -Nick
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    Steve555Steve555 Member Posts: 1
    Although the actual dollar amount is not shown on the Edmunds reports, advertising IS mentioned on each vehicle price breakdown. Between 1 and 3% I think.

    Take a look.
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    jim2jim2 Member Posts: 43
    Over the years I have bought a number of new vehicles includings Hondas, Toyotas, Acuras, Pontiac, Mercedes and Ford. I paid from $200 to $500 over invoice and have recently priced 1998 Chevy ext. cab 4x4 pickups and was quoted $200 over invoice. The best deal I got was a Toyota Previa at $400 over invoice plus a $1,400 mfg. rebate which the dealer did not tell me about. This Toyota dealer, in 1993, was the first dealer to mention an advertising fee. I refused to pay it and got the van.

    Anyone should be able to buy any vehicle, with few exceptions, for $200 - $800 over invoice if you are patient and willing to walk away from a deal and shop around.

    I have yet to hear for certain if the advertising fee is legitimate or just another negotiable add-on profit. The dealer who quoted the 1998 Chevy pickup for $200 over invoice did not ask for an advertising fee.

    I believe dealerships expect to make their profit on used car sales from trade-ins. New car dealerships get some of the best trade-ins and make $2,000 plus on these car sales and turn them fast. It is tougher for a used car lot as they have to get their cars from brokers and at auctions.

    I'm finding it much tougher to get a good price on a used vehicle than a new one.
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    mackabeemackabee Member Posts: 4,709
    Advertising fees ARE part of the invoice and not added to the invoice price of a car.
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    nhamawinhamawi Member Posts: 5
    Mackabee,

    Well, that depends on which invoice you look at. The dealer invoice will include a regional advertising fee; for example, a 98 Mustang GT in MA holds around a $230 advertising fee that is charged to the dealer. Edmunds invoice information does not include this fee. As you said, however, it is a REAL fee, and dealers have to account for it in order to make a profit. Therefore, if you are bidding 500 over invoice and refuse to pay this fee, they may take it off since there's room for such negotiation. You could also tell the dealer to take the equivalent amount (say $200) off the selling price and call it $300 over invoice while still pay for the advertising fee. The result is the same. It just depends of what makes the customer feel better.

    It doesn't prove anything to say that one never had to pay it; it may just mean that the deal never got low enough for the dealer to reject the request in order to make the sale. Again, it's a real fee, and so is heat, electricity, maintenance, etc. They have to build this into their sale price in order to make a profit.

    -Nick
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    RoclesRocles Member Posts: 982
    People,

    We pay for advertising in every product. Its just that car companies show you on paper.
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    dingdongdingdong Member Posts: 9
    I do believe advertising fees are negotiable. If you're willing to put your foot down and say no, they'll probably not charge you. And plus, it's the dealer's job to advertise. It's not the consumers. And why should we have to pay for their advertisement? And all HONDA BUYERS, be forewarned, advertisement fees are INCLUDED in the invoice. So don't let them charge you again. If they do, get up and walk!!
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    pgood77pgood77 Member Posts: 1
    Thanks to Edmund's I just purchased an Oldsmobile Intrigue at what I consider a good price. I did have to agree to pay $240 for the undercoat (the dealership undercoats all their cars when they get them) and the 2% advertising costs, but except for that, I got it at $0 over invoice with the Kelly blue book value of my Escort in trade. I had decided on getting an Intrigue and received a quote through Auto-By-Tel at $400 over invoice at a Chevy-Olds dealer in Springfield Tennessee. This was unfortunately about an hour away from where I live and the only car with leather interior was a GLS with so many options it was $1600 more than a local dealer's car. I carried all the Edmund's printouts to the dealer and informed them of the $400 quote. I made an offer at $400 over bare invoice and they choked on the ad fees. Fortunately I had called the other dealer and asked about add-on fees and was guaranteed there was none. The local dealer let me call the other dealer in the office to verify again that issue and the dealer confirmed it. They said the best they would consider was invoice + 2% advertising and the $240 undercoat with the blue book value (which I handed them) of my Escort. I felt good about it, and I didn't want the out-of-town car that bad anyway. I think the other dealer would have offered less on the Escort anyway. Assuming the undercoat is worth nothing to me, I still got the car at an absolute cost of 3% over invoice. After reading Edmund's buying guide, I would have been happy with 2.5% even paying the advertising on top of that.
    I love the car and I am pleased with the dealership (Ed Groves Olds in Clarksville, TN) and the deal. Without Edmund's and Auto-By-Tel, though, I could have easily spent hundreds more.
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    fastdriverfastdriver Member Posts: 2,273
    Just my 2 cents- if the dealer or the car companies want to advertise their products every 5 minutes on TV or everyday in the newspaper, why should I have to pay EXTRA for that. This should be included in their cost of doing business. It's like going to Walmart to buy an item and the price tag has two prices- one for the item and an additional cost for their advertising! Give me a break. They have to pay for heat, electricity etc. too just like the car dealers.

    Many people have said that a new car dealer can sell his car for cost or below cost because they MORE than make it up with their used car sales and their service department. This is a fact!

    Bob
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    KevTKevT Member Posts: 1
    I recently purchased a Jeep Cherokee (8/1/98) at what I thought was a good price. The Balt.-Wash. market has about $340 in advertising fees on the vehicles (it seemed to vary slightly from a Wash dealer to a Balt dealer).

    Rather then look at the advertising costs separately, I utilized my Edmunds pricing information to come up with a bottom line price I considered acceptable to me. I took the invoice price less the holdback and gave him 2.5% in profit (to include his advertising costs) or $479. This I considered a fair deal.

    I view the selling of new cars as only a component of the profitability of the dealership. I believe the largest portion of his profit is generated in the used cars and especially in the shop (with rates as high as $55/hr against bogus standards for repair times.

    The only thing I must admit is I was unprepared for the advertising expense and a few other little ones (I have only had to purchase one car in the last 12 years-an accord in January). Is there some way Edmunds could get the advertising costs numbers and incorporate them into the pricing information ?
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    car6car6 Member Posts: 1
    isnt holdback 3%?
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    flatfenderflatfender Member Posts: 2
    I am looking a ordering a 1999 Jeep Wrangler Sport. Can anyone tell me how the advertising fee and regional fee is calculated? One dealer told me that there was two fees. One was the advertising fee and the other was a fee that went to support the regional office. He said that the total of the two would be in the $400+ range! He told me also that all of their vehicles have the same flat fee! Anyone explain?
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    CarMan@EdmundsCarMan@Edmunds Member Posts: 38,514
    Flatfender, many manufacturers do actually charge their dealers two advertising fees. One charge is levied by the manufacturer in order to help pay for the company's national advertising campaign and the other is charged by the dealership's regional ad group. This may be the case in this situation. Don't concentrate on the fees and let them irritate you. Take a look at your deal as a whole, including all of the fees and see which dealership has the lowest final price.

    Your Co-Host
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    bob37bob37 Member Posts: 1
    DOes GM charge 1% of the MSRP and add it to the negotiated price for advertising?
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    flatfenderflatfender Member Posts: 2
    Car_Man, thanks, but I still would like to know how is the fee calculated. Based on what? Also why doesn't Edmund's show this on their website as part of the invoice pricing?
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    CarMan@EdmundsCarMan@Edmunds Member Posts: 38,514
    I'll take a look around and see what I can find out about GM and Chrysler advertising fees. Stay tuned and I'll post what I find out.

    Your Co-Host
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    mscomsco Member Posts: 6
    Just what is legitimate to pay?
    OK! We have to advertising and how about their salary and commission....?
    Some dealers in my area also charge "processing fee"
    With so many blah, blah blah
    What exactly should I pay reasonablly? Can someone tell me?
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    CarMan@EdmundsCarMan@Edmunds Member Posts: 38,514
    Msco, I think that you are losing sight of the big picture by looking at all of these fees. The new car shopping process all boils down to trying to get the vehicle that you want by paying as little money as possible. Shop around at a couple of dealerships in your area and get quotes that include all of the fees that you will be required to pay. Then take the lowest one.

    Your Co-Host
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    timothyt1timothyt1 Member Posts: 1
    For your information ... the advertising fees in St. Louis for a Chrysler 300M totals $440. The dealers I have talked with will not budge on this and pass them right through to the customer. Edmunds does not list this as a part of the invoice price, but there is a note that states the following:

    [Advertising Charges: All vehicles carry a legitimate manufacturer advertising fee equal to one to three percent (1-3%) of the MSRP, depending on geographic region. This fee is passed on to the consumer without dealer markup, and is non-negotiable.]

    I don't like it, but I agree with Car_man on post #30. I was just surprised with advertising fees this week.

    TimothyT1
This discussion has been closed.