Dealers throughout the United States charge extra fees when you buy a new or used car, ranging from standard documentation fees to more dubious transport fees. Florida law has limits on the types of fees dealers can charge, and how transparent they must be when charging them. Therefore, it's a good idea to brush up on Florida dealer fees before making a vehicle purchase.
What Are Some of the Dealer Fees Florida Dealerships Charge?
Car dealerships often make a profit nickel-and-diming car buyers with fees. Once the buyer has negotiated a price for the vehicle, a salesperson typically shows up with paperwork offering extra services and slipping as many expenses into the exchange as they can. Some of these dealer fees are legitimate state and federal fees you are required by law to pay. But others are unnecessary add-ons designed to satisfy the dealer's bottom line.
Unfortunately, car dealers rarely mention such fees during negotiation, and they can come as a nasty surprise. The next time you buy a motor vehicle, ask about dealer fees right away, and negotiate them down as best you can. Alternatively, ask for an itemized list of dealer fees by email before you visit the dealership. Most professional dealers are willing to be upfront with costs as long as you take the initiative. With some shrewd negotiation, you might be able to cut the fees dramatically.
Most dealers have documentation fees. These doc fees cover the time that the dealership's office workers spend processing paperwork once a car has been sold, such as the vehicle registration and title. Also known as processing fees, these charges are often non-negotiable and vary widely from dealer to dealer – though some dealers dismiss them if you make a large enough purchase. Florida has the highest documentation fees in the United States, with an average doc fee of $670. By contrast, New York has the lowest doc fees, with an average of $75. Other states with unusually high doc fees include Alabama, Georgia and Tennessee.
Some states have limits on how much dealers can charge for doc fees and how the costs can be presented. For example, Texas allows a maximum doc fee of $150, while Kansas enables a maximum of $299. Even though your dealer isn't likely to cut doc fees on request, you might be able to ask for a perk in return such as floor mats.
Tag and Registration Fees
When registering a car with the DMV in Florida, you must pay a fee. This fee varies according to the price of the vehicle. More expensive cars tend to have higher registration fees. Sometimes dealers pay the registration fee as part of a special deal, but usually, it's the buyer's problem. It costs about $200 to register a new car in Florida, but you may be able to pay a much lower registration fee if you're merely transferring a license plate from your old car to your new vehicle. Always check the Florida Department of Highway Safety and Motor Vehicles website before paying a registration fee to make sure the dealer isn't inflating it to make a profit.
Dealer Preparation Fees
Dealer preparation fees are the fees that dealers charge customers after a car purchase to prepare a vehicle for leaving the lot. This preparation may involve checking the tires and fluids, removing the dealer's stickers from the car and giving the vehicle a quick wash. None of these tasks take a long time to complete, as vehicles are usually in excellent condition once they leave the factory. Therefore, dealer prep fees are a bit of a scam, as these fees can run as high as $300. Dealers sometimes include prep fees as a line item on their pre-purchase paperwork to discourage you from contesting them. But you can often convince the dealer to lower them as a condition of your purchase.
No car buying is complete without hefty sales taxes. In Florida, the minimum sales tax for a vehicle is six percent of the price of the car. If you trade your car in Florida — that is, sell your old car to the dealer to lower the price of the new car — you only pay a sales tax on the trade difference. This law contrasts with other states such as California or Kentucky, where you always pay a sales tax on the initial car price, even if you made a trade-in to lower the cost of the new car.
Florida's sales tax policy is generous in this respect, as the trade difference is always lower than the final price of the car and ensures you pay less in sales tax. For example, if a new car costs $20,000 and you trade in your old car for $8,000, you only have to pay six percent on the $12,000 trade difference. That's in place of six percent on the $20,000 sticker price, resulting in sizeable potential savings.
On top of a state sales tax of six percent, you may have to pay an additional sales tax of about 0.25 percent, depending onyour city or county. Sales taxes are the most significant fees you must pay when buying a car. Some dealers don't mention this expense until after you've purchased the car because they don't want to scare you away from the deal.
If you're taking out a loan on the vehicle, you have the option to roll your taxes into the loan along with your license and title fees. However, this is generally a bad idea, since you end up paying more interest on the loan. Instead, pay your tax, title and license fees on top of the 15 to 20 percent down payment when buying the car.
Also, remember that you always pay your sales tax for the state where you register the vehicle, not the one where you buy it. Also, if you receive a manufacturer cash rebate, Florida law says you must pay the sales tax for the vehicle purchase price before any incentives are applied.
Auto manufacturers such as Ford and Toyota charge dealers an advertising fee on top of each vehicle they sell them. Sometimes the cost is baked into the factory invoice price, and other times it's listed as a separate item. This fee is a few hundred dollars per vehicle and helps auto manufacturers pay for dealer ads on television and elsewhere. Some dealers outsource these advertising fees to customers, adding them as a line item on customers' invoices, but they should pre-add them to the sticker price instead. Also, dealers sometimes try to pass off their own advertising expenses as the fees that auto manufacturers charge them. Check your invoice carefully when buying your next car to avoid falling for this trick.
When it comes to fees, are plenty that are legitimate but also some that are less so. For example, some dealers charge hundreds of dollars to etch the car's vehicle identification number into its windshield. Although this practice is a useful anti-theft measure, mechanics charge far less than dealers to do it, and you can etch the VIN yourself with a $20 kit. Police departments and local service clubs sometimes etch the number for free.
Another expense that dealers sometimes charge is a loan payment fee. It is a fee of a few dollars the dealer charges every time a customer makes a loan payment.
The Florida Department of Revenue levies a set of three fees for each car purchase called the Tire/Battery/MVWEA (Motor Vehicle Warranty Enforcement Act). This fee package is intended to cover the environmental impact of tires and car batteries while helping people who've lost money buying lemons — that is, low-quality vehicles. Overall, you might pay $7 or $8 for this fee package.
Some dealers try to get away with charging electronic filing fees on top of their documentation fees. Such fees are considered unnecessary these days since third-party companies, such as DealerTrack, handle electronic filing for dealers. Also, dealers may add a market adjustment fee of $1,000 or so to the prices of the most in-demand cars.
Still, other fees that dealers like to add include paint protection fees, which usually involve little more than a wax job. Fabric protection add-ons may require an upholstery treatment to make the car's interior more stain-resistant. These fees might be hundreds of dollars, so make sure you know what you're getting for your money.
Finally, some dealers add a destination charge to the MSRP. This fee is meant to cover the delivery of the car from the factory to the dealership. Sometimes this fee is legitimate, but dealers like to charge fees for each stage of the delivery process — "pre-delivery inspection," "vehicle procurement" and so on — so be vigilant to ensure you're not double- or triple-dinged.
What Are Florida's State Laws on Dealer Fees?
As per Florida Statute 501.976 (18), dealers in Florida must disclose whether a profit is built into each fee. Also, F.S. 501.976 (16) states that Florida dealers must include all fees the buyer must pay within the advertised price. Dealers are exempt from including state and local taxes, title fees, and tag and registration fees. Auto retailers often break these laws since the state doesn't have the resources to enforce them effectively. Nevertheless, you might be able to get dealer fees cut down considerably during your next car purchase if you bring copies of these statutes to your dealer.
Dealer fees are part of the car buying process in Florida. You must pay some of them if you want to purchase a vehicle. To avoid falling for dealer scams, though, you should always make sure the fees are legitimate and contest them if they're not.