Used Car Dealer Processing Fee's

Is this a new trend? You see a car advertised but then there is a "non-negotiable" processing fee. I have been shopping for a STR and the two cars I am working a deal on at the moment both have that fee added on.

Both cars are in excellent if not "like new" condition. Both cars are the same interior and exterior colors.

Car 1 is a higher optioned car. It has factory NAV and every bell and whistle you can get. It ahs about 60K miles

Car 2 Is a lower optioned car. Meaning it does not have the factory NAV and it does not have the backup camera and the radar that lets you know if you are close to anything. It has about 80K. This is kind of a stripped down car but it has the STR driveline and brakes and exterior aero. I would call this more of a drivers car.

The cars prices both reflect the options and the mileage so I am not complaining about the asking prices of the cars and even with the added processing fee's that both dealers want it is still not a price issue for me. Since car #1 is much closer to me and it is the higher optioned car it is more than likely the car I am going to get.

Car #1: Dealer markets himself as a wholesaler. The price of the car is firm (I asked and even made a cash offer) but was turned down. I was told that is not how they do business. They are a wholesaler that will sell to the public but they add a processing fee. I asked him if I came in with a friend of mine that has a dealers license would they waive the fee and they said absolutely. The Processing fee on this car is $495 added to the advertised price of the car.

Car #2: They did not market them self as a wholesaler but when I made the same proposal they also said they would waive the processing fee. The processing fee at this dealer is $295. Unforchinitly this car being so far away it would cost me more to have my friend come with me. And trying to do that sale via remote control is just not worth the $300 or so it would save me.

So when did this become a common way of selling cars? Also, what are they doing that they have to charge that much more to sell to the public. Is it some legal thing like insurance when selling to the public? Are there added fees and taxes they have to pay on a retail sale?

I actually don't mind the fee's added as long as they are upfront about it. Both dealers were nice enough when I called them and were very up front about how they conduct business. This is not really a complaint it is more of a is this the new used car business model question.

They're learning from the new car dealers.

I've run across another interesting one: a particular dealer I run across frequently on Autotrader has a $999 "Reconditioning Fee" hidden in the fine print on their used cars! That's on top of the usual processing fees that I have come to expect.

Nope old trend and been around awhile.

I actually list in the offer when I make it.

$15,000 -$495 + State taxes, title fee.

Offer for vehicle is $14,505 + $495 + State Taxes and title fee.

Maybe I can get around the $2017 price limit in the classifieds by offering my Acura for $2017 (+$500 processing fee)!

The fees came along about the same time auction houses figured out they could add a buyers fee on top of the bid, which happened about when Costco convinced people it was ok to charge a fee to buy product from their store, which happened about the time Coca Cola started selling clothes with their logo, instead of giving them away and enjoying the free advertising.

It was about when people got stupid.

Streetwiseguy wrote: The fees came along about the same time auction houses figured out they could add a buyers fee on top of the bid, which happened about when Costco convinced people it was ok to charge a fee to buy product from their store for way cheaper than any other store with unmatched customer service, which happened about the time Coca Cola started selling clothes with their logo, instead of giving them away and enjoying the free advertising. It was about when people got stupid.

FTFY

My dealership stopped buying cars from auctions a few years ago. They started selling for full retail, leaving absolutely no room for profit. We even see corner lots selling cars for the same price they bought them from the auction. My guess adding a fee guarantees a small profit on every transaction.

Mmmm Costco koolaid.

Streetwiseguy wrote: Mmmm Costco koolaid.

Koolaid bought in bulk at least

I just ran into this while looking for a BMW wagon commuter

Check out this jerk.

Skip down to the terms. Then look at item #2. Just a white bar. Now highlight the text as if to copy. This reveals the hidden (white text on a white background) $400 "processing" fee. I almost emailed to say that alone cost them a sale, as if that would matter to them.

I will never buy a car from a dealer that tacks on a fee like that and especially one that tries to hide it because they know the fee is bogus.

In reply to Apis Mellifera:

Wow, I'd think if that was brought up to EBay, the seller would at least get a slap on the wrist. Just checked another listing of theirs, and it's that way, too. Guessing it's SOP for them.

Not sure about your state, but dealers selling to the public might be on the hook for a buyer's remorse clause or default warranty. Wholesalers selling to dealers would not be, and might add a fee if they sold to the public. That might be why they were so willing to waive the fee when you offered to take it through somebody with a license.

In reply to Apis Mellifera:

I don't see it on my phone. But I know what you're talking about. I've seen the same and feel just like you do.

In reply to Apis Mellifera:

Just reported the listing, but Ebay didn't allow for any text description saying specifically what happens, hopefully they'll figure it out.

Some used dealers here add a $1200 interior warranty that you can't decline. Basically if you get your interior dirty you can bring it to them to get it cleaned for free. It only last a year.

Bought a car for my wife, trading in her old minivan. Refused to pay the 'documentation' fee. They tried to justify it as being to ensure that we got good title. I told them that if we didn't get good title on a new car purchase I'd be seeing them in court and quoted the applicable sale of goods legislation. They backed off that argument but said that they never waived it.

We said fine and walked. They caught us at the door and agreed to increase the trade in value by the amount of the documentation fee, and we bought the car.

wspohn wrote: They backed off that argument but said that they never waived it. We said fine and walked. They caught us at the door and agreed to increase the trade in value by the amount of the documentation fee, and we bought the car.

That's the only way you can do it. No dealer ever will flat out waive the tack-on fees. You just have to figure what you're willing to pay for the car in toto, search the fine print for all the fees, then subtract B from A to come up with C, which is your final offer.

The issue is is they waive it for one, they can be forced legally to waive it for others after the fact.

Yep, last time I bought from a "traditional" dealership they tried this on me after negotiating and when it was time to pay. I wasn't mean about it, but basically told them, "well I guess subtract that amount from the original agreed-on price and we have a deal or I walk". They did and I drove away in the car. If they were unhappy about it they should have told me when we were originally negotiating rather than after the fact.

Sounds like the OP's dealerships/wholesalers are at least being up front about it.

yupididit wrote: Some used dealers here add a $1200 interior warranty that you can't decline. Basically if you get your interior dirty you can bring it to them to get it cleaned for free. It only last a year.

i would take a steaming E36 M3 in that car every morning for 365 days and make them clean it.

gotta make it worth every penny

Yeah, I've never been able to get them to remove it, but they have ended up giving me an allowance in another area (trad-in, purchase price, etc.)

In Ohio they will tell you, "there is a law about it and they have to charge it."

Yes, both of those may be true but they are mutually exclusive. You see, there is a law that states:

A motor vehicle dealer may contract for and receive a documentary service charge...

Which then references another law which says:
...may be charged if the charge does not exceed $250 per sale

Of course at the dealership you will confronted with a sale document with a pre printed line item of $250.

I always ask them to explain this. I have even asked them to please write next to it that Ohio Law REQUIRES you charge this. They never do. It is just their boss who is requiring it. Like others, it always stays on the sheet as a $250 charge but I get the sale price or trade price adjusted to reflect the $250.

I always point out to them that they have chosen to charge me the ABSOLUTE MAXIMUM that the law allows and I do not see this as good business for me when they do not have to charge any at all.

My theory, if I ever bought a car from someplace other than insurance salvage, would be to negotiate the final price, add taxes as required and write a cheque. If they suggested the amount on the cheque wasn't enough, I would offer to tear the cheque up and leave, since I was done negotiating when we agreed on a price.

I'd not likely have the guts to actually do it, but I like to think I'm a big deal.

In reply to John Welsh :

What is it about Ohio?

I just went through this BS buying a used car. Ohio dealer said I'd have to pay their state's sales tax as well as my own. I only took one crappy dealer to set me straight, and I had the right questions in my head to ask dealer #2. Suffice to say, I drove away with a car that was almost $500 more asking price for less actual cash outlay. $200 vs $500 processing fee, or whatever it is called, No sales tax paid until I went to register in my home state, no hidden fee BS from dealer #2. Sucks, but the same message applies: Caveat Emptor.