Did you recently take on (or consider) a loan of 84 months or longer on a car purchase?
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That's all a part of their profit on the car. We don't get a "bagging charge" from Krogers, or a "bag charge for produce" where we put it into a little bag, or a "cart usage fee" for using the push carts.
2014 Malibu 2LT, 2015 Cruze 2LT,
I probably have given them a strong air on suspicion and distrust...
it seems that all will go well...i guess i should relax and consider my work done, with a decent deal.
Peace and blessings.
still, i am happy to find a dealer wishing to sell the car at the price i asked (which isn't unreasonable at all).
A saavy customer can also pick up on sleezy dealers, which unfortunately are in great abundance in the nyc area.
My state requires the dealer to provide the car owner with the license plate and registration. I looked at the DMV site and the required paperwork, etc. The total for the fees is well under $100.
thanks for understanding my point. If the government requires me to keep my client's paperwork, it's my cost of doing business. I guess I should become equally unethical and charge them for my required and legal costs of doing business.
anyhoo, thanks to everyone..it's appreciated. I couldn't have done what i've done without all the feedback and info I've receieved.
best,
"The Yogi Fan"
While you need not be difficult, I wouldn't quite relax yet, either. Until you've signed the paperwork and exchanged money for keys, you aren't quite ready to chill out just yet.
If the F&I process involves some efforts to bump up the price a bit more (the whole "we made a mistake and can't sell it for this price, so let's split the difference" schtick), don't be shocked. Just stick to your guns and the agreed-upon price, and don't compromise by paying more. (The "compromise" in that situation would be coming entirely from you.)
Your suspicion and mistrust are not entirely unfounded, just don't let it get in the way of what you're ultimately trying to do here. You're not there to become friends with the dealer or to get all warm and fuzzy about them, you just want to get the merchandise and leave. If I focused so much on this "trust" factor that some other posters here so strongly advocate, then I'd be riding the bus and using a skateboard to fulfill my transportation needs, because there isn't a car dealer on this planet whom I would trust that much. For a used car, trust is a more relevant factor because of how easily a pro can conceal problems on a used car, but for a new car, most of the trust that you need comes from the warranty provided by the manufacturer.
Speaking of warranties, if you are going to buy one from the dealer, be sure that it is the manufacturers' extended warranty, and not one offered by a third party. You can buy a third party warranty on your own, and not involve the dealer at all. (The only benefit of buying it from the dealer that I can think of is that you might be able to roll the cost into your financing, if need be.)
It actually covers an expense that the dealer has. This is for the dealer doing the paperwork with the state. The dealer does have to pay people to do this act. So its not all profit.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Are you saying that it costs the dealer $600 to fill out the forms in Florida, but only $50 in California? Hmmm...
I'm presuming that the dealer covered his overhead costs, such as dealership salaries, from the sale of the car, which means every additional dollar earned above that is profit. The staff needed to fill out the forms are a fixed cost, who are on the payroll regardless.
Calling it a "fee" is simply an effort to make the amount appear to be official and/or non-negotiable. Next thing you know, we're going to see an "adding air to tires fee", "coffee fee" and "dealer suit drycleaning fee" added to the bill...
No I am saying that it is for a service the dealer provides and that the dealer has a cost involved in providing that service. I never said there was a direct relationship between what they charge and what it costs them.
I'm presuming that the dealer covered his overhead costs, such as dealership salaries, from the sale of the car, which means every additional dollar earned above that is profit.
Then don't presume. Dealership accounting principals don't presume that why do you?
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
You should think less like an accountant, and more like a business person.
Business doesn't run on beancounting -- accountants just classify the money that businesspeople make. The business is run by bringing in more dollars into the door.
The dealer calls it a "fee" to make it seem that it is a seperate legitimate expense that can't be negotiated, when it is no more seperate than being asked to pay an "electricity fee", "carpet cleaning fee" or "window cleaning fee."
The use of the word "fee" makes it seem untouchable, and the dealership will call as much of its revenue a "fee" as it can in order to justify taking that money from the customer.
Next time that I buy a car, I think that I will deduct my "time-driving-to-the-dealership fee", "had-to-convince-the-girlfriend-that-my-car-budget-took-precedence-over-her-jewe- lry-budget fee", and "computer-time-needed-to-research-holdbacks-and-incentives fee" from the purchase price. (I assume that the dealership will understand that I have "fees" that I need to cover.) As you can guess, the girlfriend-related fee will not be the lowest of the three!
Yet just over the Blue Ridge Mountains in the next town, the Toyota dealer charges $150.
The interesting thing about these fees is that they are preprinted right on the contract, making them appear to be non-negotiable. And in fact they ARE non-negotiable, unless you pit one dealer against the other, as I did when my son bought a Prius last summer from the "over the mountain" dealer.
In my view, such bogus fees should be done away with by law if necessary; if the dealer wants more money, then he should simply charge somewhat more over invoice.
Exactly -- calling it a "fee" is just a negotiation tactic. A $700 "doc fee" makes the $200-above-invoice deal that is actually $900 over invoice seem better than it is, and arms the seller with the appearance of legitimacy by giving it a special name.
Printing it on the contract is just icing on the cake. One negotiation tactic is to simply put something in writing, and then to point at it if challenged, as if some Car Sales God came down from Mount Olympus to make it official.
There was an old Candid Camera episode in which Alan Funt erected a sign at the Delaware state line that declared "DELAWARE CLOSED." When confused motorists would ask about it, Funt would just point at the sign. Some questioned it, but he used that sign to stop traffic, and apparently almost no one challenged its or his legitimacy -- effectively, Alan Funt actually succeeded in shutting down a portion of the state with his sign. Putting it in writing made the absurd seem that much more legitimate, and giving it an official look and label only added to the effect.
Speaking of fees, dealerships in VA will also usually have another preprinted item called "dealer business license fee."
This is really a tax, imposed on the dealership by the city, town, or county. In my area, the amount is 0.2% of the bottom line price ($40 on a $20,000 car) -- not a big deal compared to those "processing fees."
So this is not a tax the consumer must pay, but simply one that's passed along as a fee to the consumer.
So when you agree on a bottom line price of $xx,xxx plus title, tax, and license, VA dealers will add their tax to the taxes/fees the consumer must pay the state and locality.
One great thing about VA though is that our sales tax on cars is only 3%, title is $10, and plates for one year are $29.50.
I am thinking like a business person. It takes people to process that paperwork needed for the car to be licensed for street use. You have to pay for those people.
Business doesn't run on beancounting
Well part of running a business is in the bean counting. In order to effectively run a business you must understand the financial aspects of the business. That includes how the money flows through the business.
The dealer calls it a "fee" to make it seem that it is a seperate legitimate expense that can't be negotiated,
The dealer calls it a fee because it is a fee.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
And in my case, since the DMV is literally only a mile or less from the local Toyota dealer, I'd be more than willing to not pay the dealer's add-on processing fee if they'd just give me a temporary plate and let me go to DMV myself.
Anyways it is estimated that it costs a dealership between $10-15 to do the processing.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
The dealer is required by the bank, finance company, leasing company to register the lien on the vehicle with the state and threfore is required to handle the registration.
Now you're being silly.
They call it a "fee" because it sounds official, something akin to a tax. By calling it a "fee" instead of "extra money for our pockets", it sounds authoritative and legitimate.
It's one of the oldest negotiation tricks in the book: to point the finger at a higher authority to avoid the need to negotiate or entertain a counteroffer. Be on the lookout at your next car purchase for the "dealer signage fee", "receptionist fee" (along with the "low-cut top surcharge") and "manure...er, it's for the landscaping! fee"
No I am not, its a fee, nothing more, nothing less. But fees are negotiable.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Now let's look at this from two angles.
1) Big-time new car dealership
They hire a title clerk to do the paperwork and make the runs to the tax office/get the tags/file the title. They pay the clerk for this, and that's where it goes. Fine by me. But if the clerk is paid $8/hr and does ten titles a day, then the dealership is definitely making money off the fee. The title clerk probably drives a car off the dealer lot, so there's a little more expense there. And they have computers and printers and paper and ink to pay for, too. I think $50 is a legitimate amount, and that's what Texas thinks, too.
2) small little tote-the-note lot
They also hire a "runner" to go file the titles. The small time dealer can't take the time to go to this because who is going to watch the lot and sell the cars? They pay the runner a lot more than $8 a hour. Usually the runner gets $10-$20 PER TITLE. The dealer still makes a small profit on the fee, but then again the runner is probably using a dealer-supplied car to make the runs so there's gas and wear/tear on the car to pay for. I used to do this for a dealer and I made GOOD money when he was busy. All it required was sitting around the tax office waiting on them to call my number. I'd drive over, get my number ticker, sit there, wait to be called, then show them my ID, hand them a stack of five titles, get the paperwork back, sign for it, and drive back to the lot. Sometimes it took an hour, sometime as much as four hours. And you can only do five at a time and then they send you to the end of the line to start over. So if I have ten titles I have to sit there twice as long. But it was good money for me and for $50 I think it's a deal to not have to sit there at the office and wait for "82" to come over the tinny little speaker.
as an accountant
bean counting is overrated and can get in the way (if you really want to run a business in the ground, let an accountant manage it). As a CPA, I know I can count and I know what the government requires them to do and how much it costs them to do it, in my state and the two states nearby. As a regulatory business person, I also keep my antenas up all the time, because i've grown accustomed to seeing the worse..that's why i agree, that i need to bring it down a notch.
however, as a business owner, and a financial person (aside from accounting and bean counting) the amount they charge is not cool. If they want to nickle and dime you, just raise the price of the car. what is most important is how much money you are going to have to put out of your pocket to drive off the lot with the car. But they give you the "price" you want, knowing full well that they are going to pad the bill or nickle and dime you to get where they really want to be.
i think the next time i do a tax return (which i hate by the way - smile) i'll charge the customer an extra fifty bucks and call it a processing fee, because the government tells me that i have to keep the files for a few years.
If I were smart, I would include it up front and leave all the nickel and diming craziness alone...maybe i might even build enough good will, that others will refer customers to me...
hmmmmm.....
I agree, just charge a little more for the vehicle and leave off the mickey mouse fees. They could even advertise it: no processing fees, no additional dealer markup, no pinstipes, no mop n' glo...the only extras are those required by the state: sales tax, title, and plates.
They could still sell the extended warranties and prepaid maintenance agreements in the F&I department. Plus they can stock lots of nice factory accessories in their parts department -- that is, find other ways to turn a good profit.
tidester, host
That means no silly wording for part of their standard costs. How would they react to a "check writing fee" and a "driving to dealership fee" and an "hourly fee for negotiating with their sales rep" or a "providing title fee"?
2014 Malibu 2LT, 2015 Cruze 2LT,
I agree it would be nice if they did away with the “Doc Fee” (gee, I like the sound of that term. Sounds very “Official” doesn’t it?), but since it’s so easy to get an additional profit this way, why should they change what has been so successful for them?
Everyone that hangs out here knows it for what it really is but I’m convinced most buyers feel they ‘must’ pay it because it says so in black and white (pre-printed) right there on the bill of sale.
I sure hope grocery stores don’t get any wise ideas, like “Bagging Fee”, “Register Fee”, "Nice End of Aisle Display Fee”, etc.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
As I understand it the salesperson doesn't get any of this. Everything above the actual cost of doing the paper work, goes directly into the owners pocket.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
You're right about Florida. My brother retired there a year ago. He's cool but me sister-in-law is a BIG MOUTH.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
With respect to DMV fees - it's not that they keep the money. They readily admit that they can't keep the excess that they charge. BUT, what they do is overcharge you (knowing that they have overcharged you by a specific amount) and take a period of time to refund you the money.
So while this happens:
1. You don't have the use of your cash or credit.
2. They use the cashflow to finance daily operations. (the money is deposited into an interest bearing account, for sure).
If you borrow $10 from a dealer, you are charged a daily, compounded interest rate until you repay the money. Why shouldn't they be charged for the use of your money?
Is it nickle and diming? Certainly; but it's your/my/someone's nickle or dime and he/she is entitled to it. The dealer uses the customer as a interest free loan source AND they get away with it....
I call that unethical....
just IMHO...
But VA dealers are heavy on the processing (doc) fees -- in my small town $189 to $248 is the norm. On luxury cars in metro areas, I've seen as high as $399.
MD does have a limit, and that's good IMO. Oh, and now I understand why dealers are so reluctant to negotiate these fees -- all of it (save the small amount actually used for processing the paperwork) goes to the owners, not the salespeople.
That further explains many years ago when I balked and walked out over the processing fee that the dealer later "removed" it, but only by reducing the cost of the car by that amount and leaving the fee in the contract.
So you get a percentage of the payable gross profit which is the gross profit minus the pack and at the very least a detail job.
So a car with say 1,800 dollars worth of gross profit minus pack of 300 bucks minus a 150 dollar detail job would be 1,350 of payable gross. Assume a commission percentage of 15% and the salesperson makes 203 dollars. Now if the dealers has a stupid high 599 doc fee that the customer demands not to pay then the payable gross goes down to 751 dollars and equals a commission of 113 dollars.
Some stores have gone to just a flat fee paid to the salesperson because grosses have gotten so slim on new cars that have a percentage based commission is stupid.
So you might make 45 dollars a new car up untill ten new cars then you make 65 dolalrs a car retroactive back to the first car. There would be several bonus levels that just keeps inceasing the flat fee you get always retroactive to the first car.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
You have to understand, the states are so nitpicky. IF you send a power of attorney form and the customers prints his name with a middle initial, but signs it with out. The state will hold the title and the customer has to fill out another form. This is why there are $50.00 doc fees. The gas the time and the aggravation.
Yep, I'm sure the sales people love this. They're the ones that are out in front and have to face the customers that go into a tirade about hidden fees, knowing full well they aren't going to get any of it.
Like I said in a previous post on one of these boards, "dealers will even take advantage of their own employees and they wonder why the buyer has such mistrust towards them".
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
If all you care about is price, the BEST way to compare deals is to ask all the dealerships you might buy from "what will it cost to put the car in my driveway?" That is, what's the BOTTOM LINE price for everything (car, taxes, tags, fees, etc.)
The way to get the best deal is to just keep going back to each dealership (by phone, internet, in person) everytime you get a better offer to see if they'll match or beat it til all the dealerships stop sweetening their deals.
The BOTTOM line, not the lines above it, is the only one that matters. $38,000 for the car plus $2,000 for tax/plates and $0 in fees is no different than $37,000 for the car plus $2,000 for tax/plates and $1,000 in fees.
The reality is that dealerships often charge high fees because it lets them offer higher (apparent) discounts off MSRP while clawing back a large fraction in the bottom line price.
But, as long is their discount off MSRP is enough higher than that of low (or no) fee competitors, it can still be worthwhile to buy from the "high" fee dealership. (That was my experience when I bought last December.)
Don't focus on fees; FOCUS ON THE BOTTOM LINE.
2019 Kia Soul+, 2015 Mustang GT, 2013 Ford F-150, 2000 Chrysler Sebring convertible
I would suggest talking to several dealers. If they all tell you the same thing, unfortunately, you will have your answer.
If I have too spend several thousand $ getting the car to where I want it I might as well get a Mustang.
I hope this is just frustration here because you know you're going to regret this decision unless you honestly don't care.
jmonroe
'15 Genesis V8 with Ultimate Package and '18 Legacy Limited 6 cyl
While you do need to understand the bottom line, if you don't understand the little picture, then it is hard to understand the big picture.
The dealer attempts to use these various line items to its advantage, but it is possible to use them to your negotiation advantage as well by chipping away at each of them.
For example, in my last negotiation, I was able to negotiate the last $400+ off the deal simply by objecting to the "fees", and challenging the logic behind assessing them. Had I focused on the "bottom line", then the negotation would have been over numbers and I would have not had this line of argument available, but I was able to use the supposed justification for the fees as my own justifications to not pay them.
The same logic that the dealer uses to increase the price with these fees can be turned back around on them, and used to the buyer's advantage if you are prepared to dispute them. But you have to be prepared to know what to expect, and to negotiate with that in mind.
The dealership has a bottom line, you may have just been $400 over to start with. This tactic may work better for those who appear to be average to below average negotiators. But, I think most decent salespeople would be able to sniff this one out.
Better to got the OTD route. Let the dealership figure out how to "divy" up the offer.
Let's suppose you want to knock the last $X off of the price, and you have an invoice with advertising fees on it, as was the case in my situation. We've had a couple of rounds of negotiation, and I've just received the last counteroffer from the sales manager.
Now I want to bump him down, and I want an excuse to justify my downward bump. (The deal is already fairly thin as it is at this point, because we're just a bit above invoice on a relatively popular car with no incentives and a minimal doc fee.) In this case, the advertising fees give me that excuse, because I can complain about them being "unfair", etc. instead of simply saying what's really going on here, i.e. that I'm bumping him downward again and I need some reason -- any reason -- to do it.
If you know going in that there are going to be certain "fees" that you don't want/need to pay, then of course, you should try to haggle toward a final price that accounts for that. But any excuse to getting to your number downward is fair game, and if that includes raising a fuss about that "fee", then so be it.
The point of the exercise is that it can be more effective to negotiate things downward by cutting the price into pieces, rather than dealing with one big blob of a number (OTD). Just as the dealership has a tactical reason to layer several pieces into his price -- you'll notice that the dealership surely doesn't use OTD pricing! -- you can use that same process yourself.
i would suggest a couple of things...
1. keep them and use them for winter tires, so you don't have to mount new tires on your 18" rims. you'll have a set of 17" rims with winter tires ready to pop in (if you are in a winter state)
2. lower profile tires and larger rims have a way of getting dinged up really easily on roads with lots of potholes and such. may not be a bad idea to keep them on hand if you hit a pothole or two and need to replace your wheels.
3. sell them on ebay...i had to replace my rims because of the previous pothole situation, and someone had theirs on ebay for less than the dealer would have charged brand new.
a few options to consider...
-thene
I think he fully understands the point of the argument. If you were able to lower the "fees" then there was room to wiggle in the price of the car.
The point of the exercise is that it can be more effective to negotiate things downward by cutting the price into pieces, rather than dealing with one big blob of a number (OTD).
If you are negotiating the Paris Peace Accords yes, but lets be realistic, we are talking a car purchase. I really can't see cutting the price into a few pieces being any better than negotiating the whole OTD price. You see the more you negotiate on one piece the less you can on another. There is a minimum price point where the dealer will accept the deal. Get below that and there is no deal. That means you go low on one piece you will not on another.
you'll notice that the dealership surely doesn't use OTD pricing!
Yes I have noticed that, why play their game in their court where they have the advantage? A good negotiator will get the ball in their court as much as possible. They don't play the game in the other guys court. You do better when they are in unfamiliar territory.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
Yes, I paid less money, which is the whole point here. Any justification for paying less is good.
By the way, these are the same advertising fees that Edmunds tells you aren't negotiable. The point here is that almost everything is negotiable.
I really can't see cutting the price into a few pieces being any better than negotiating the whole OTD price.
Then ask yourself why the dealer doesn't use OTD pricing in his discussions with you. It's because the dealer can use this price + fee strategy to his benefit. However, any tactic that the dealer uses to help himself can also be used to help you, if you understand it and have a game plan to handle it.
The whole point is that you may not have paid less money than someone negotiating an OTD price. Granted you may have saved $50 on the Doc fee but how is that any different than saving $50 more on the car and saving nothing on the doc fee. Or how is it any different than saving $50 on the OTD price.
My point is that looking at the whole picture them coming down on the fees only means that you didn't get the best deal on the price of the car.
Then ask yourself why the dealer doesn't use OTD pricing in his discussions with you.
Because it benefits the dealer, Why use a system that benefits the dealers and not you? I would advise using any system that doesn't benefit the dealer.
However, any tactic that the dealer uses to help himself can also be used to help you,
Big Mistake.
2011 Hyundai Sonata, 2014 BMW 428i convertible, 2015 Honda CTX700D
I sell cars to CT, MA and NY on a regular basis. I sell cars to RI, VT and NH on a less regular basis.
I have sold cars to people in just about every state on the east coast and just off the top of my head...
OH, AZ, CA, IL, too.
They all have different tax rates and different registration requirments and if there is a lien on the vehicl then I am required by the bank to do the registration and therefore collect the tax and reg fees.