Dealers throughout the U.S. 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, so 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?
When you buy a new vehicle, you're often met with fees that you might have expected. While it may feel like the car dealership is trying to make a profit nickel-and-diming car buyers with fees, many of these charges are legitimate since they're required by state or federal law to pay. Though every once in a while, a less-than-honest dealer may try to sneak in unnecessary add-ons designed to satisfy the dealer's bottom line.
Unfortunately, car dealers rarely mention such fees during negotiation, so they can come as a nasty surprise, legitimate or not. The next time you buy a motor vehicle, ask your salesperson 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 fees as long as you take the initiative. With some shrewd negotiation, you might be able to cut the fees dramatically from your sales contract.
Here's a look at the fees you should expect when pricing out your next vehicle.
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 very high doc fees include Alabama, Georgia and Tennessee.
Some states have limits on how much dealers can charge for doc fees and how the fees can be presented. For example, Texas allows a maximum doc fee of $150, while Kansas allows a maximum of $299. Even though your dealer isn't likely to cut your doc fees on request, you might be able to ask for a perk in return if the fees are high, such as winter floor mats or free oil changes.
Tag and Registration Fees
When registering a car with the Department of Motor Vehicles (DMV) in Florida, you must pay a fee. This fee varies according to the price of vehicle. More expensive vehicles 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 have a much lower registration fee if you're just transferring a license plate from your old car to your new car. You should 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. These fees can run as high as $300.
None of these tasks take long to complete, as vehicles are usually in mint condition once they leave the factory, so dealer prep fees can be an opportunity to negotiate down the price of the vehicle. 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 8 percent of the price of the car. If you trade in 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 price of car sales, even if you made a trade-in to lower the price.
Florida's sales tax policy is generous in this respect, as the trade difference is always lower than the final price of the car, ensuring you pay less 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 8 percent on the $12,000 trade difference ($960) rather than 8 percent on the $20,000 sticker price ($1,600), resulting in a gain of $640.
On top of a state sales tax of 8 percent, you may have to pay a sales tax of a 0.25 percent or so for your city or county. Sales taxes are the biggest 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 car, 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, even if it only feels like a small increase to your monthly payments.
Instead, pay your TT&L (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. In addition, if you receive a manufacturer cash rebate, Florida law says you must pay the sales tax for the vehicle purchase price before the rebate was applied, not after.
Auto manufacturers such as Ford and Toyota charge dealers an advertising fee on top of each vehicle they sell them. Sometimes the fee 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. In addition, dealers sometimes try to pass off their personal 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, there's no limit to dealers' imaginations. 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. This is a fee of a few dollars the dealer charges every time a customer makes a loan payment. No dealer that's upfront and honest should be using this tactic.
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, but such fees are unnecessary these days, since third-party companies such as DealerTrack handle electronic filing for dealers. Also, dealers may add a market adjustment fee of thousands of dollars to the price of ultra-popular cars that have just been released on the market.
Still other fees that dealers like to add include paint protection fees, which usually involve little more than a wax job, and fabric protection fees, which may involve a fabric treatment to make the car's upholstery 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. In addition, F.S. 501.976 (16) states that Florida dealers must include all fees the buyer must pay within the advertised price, though dealers are exempt from including state and local taxes, title fees, and tag and registration fees.
Dealers sometimes 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 and they happen no matter if you're buying a Honda, Hyundai, or Chevrolet. 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.