• Buying Guides

Dealer-Installed Options - What You Need to Know

By Zac Estrada | July 25, 2022

It's no wonder new car buying is a daunting experience. For starters, there are a lot of extra options that can bump up the base price of a vehicle. And with car prices at all-time highs, few people are likely looking to make a new car loan longer or more expensive than necessary.

Some of that optional equipment comes as dealer-installed options. These are accessories that the car dealer chooses and adds. Sometimes it isn't easy to know when looking at dealer options versus factory-installed options. Look at the official window sticker, and some options listed are what was put on at the factory. Some could be added when the car arrives at the port or the dealer.

Here's what to look for with dealer-installed accessories and how they'll affect what you pay.

Difference Between Factory Options and Dealer Add-Ons

The name of the different types of options tells a lot about how the manufacturer wants to present it and how the dealer or distributor wants to make sure they can make a little more money.

Factory-installed options are, of course, installed at the factory. The automaker approves these options listed on websites or online configurators. Expect the pricing of factory-installed options to stay the same from one dealer to the next since the automaker controls the prices.

Dealer-added options, or dealer accessories, are different. The automaker doesn't have to approve them, and they're typically not covered by the factory warranty — which makes sense since they weren't put on before leaving the factory. However, some of these come from the manufacturer, including items like wheels, floor mats, and even roof racks and car seats. These are typically covered under warranty by the automaker, even if they were only port-installed.

Many of these items, usually less expensive from a third-party company, are attached at the port or by the dealership. But while they're unlikely to remove them, they will be rolled into the finance or lease plan.

But there is a different category of dealer-added extras that aren't always insisted upon by the manufacturer but are more of a way to drive the price of the car up. These include vehicle tracking (LoJack), upholstery protector, clear protectors on the exterior, vehicle identification number (VIN) etching, and other things. Some dealers add several items that push the price of the car up thousands of dollars.

And pricing can fluctuate quite a bit since the dealers control the prices from one dealer to another. In some cases, dealer options are significantly overpriced since some car dealers use them to pad their profits.

Can You Turn Down Dealer-Installed Options?

Sometimes. A salesperson may offer extra items before the final price is reached or take certain things off. In some cases, such as with etching or protectors, it's impossible to take them off. But it's not in the dealer or salesperson's interest to remove them because it means less profit or commission. Your best bet is to ask, and if they say no, leave and find a car that doesn't have undesired extras attached to it.

Are Dealer Options Worth It?

Sometimes. While some add-on accessories and services genuinely add to a car's value and resale value, others are just a way for car dealers to increase their profit margins. Others enhance the appearance or function you might want from the vehicle, while others are effectively worthless and a way to bump the price up when new.

But if you are concerned with trade-in value or the monthly car payment, it can be worthwhile to pay attention to which dealer options are worth the money and which aren't. So first, take a look at some of the most common dealer options and their value.

Common Dealer Options:

Rustproofing and Undercoating:
New car dealers offer this add-on because they can boost the price of the car by up to $1,200, but it's not necessary at all. In fact, it could void the corrosion warranty as part of the new car guarantees from the automaker. All new cars now come with rustproofing as part of the way they're built. Instead, watch out for it included in so-called "environmental protection packages" that may consist of paint sealant, sound deadening, or fabric protection.

Extended Car Warranties and Service Plans:
Extended warranties can be a good deal, especially if something significant goes wrong with your car after your factory warranty has expired. But there are many options when purchasing an extended warranty, and automaker-sponsored ones are better than buying one as a dealer option. And you don't have to buy your extended warranty if you want one when you buy your new car. Instead, you can purchase one at any time.

Check out extended warranties provided by your auto manufacturer or even through your auto insurance agency rather than opting for a dealer-provided contract. Third-party warranties often exempt the systems in a car that are most likely to need work (navigation systems are one good example), and they can be pretty overpriced.

The same goes for extended service plans, which some automakers offer. These are prepaid plans that can be rolled into your monthly payment. While it means you must visit a dealer's service center, rather than going to an independent service department, it means there's nothing to pay when taking the vehicle in for routine service. Not only is that convenient, but it also allows you to pay for service over a long period, rather than in big lumps. And it's advantageous for luxury or exotic brands with high service department labor rates, making essential maintenance expensive.

Fabric Protection:
Of course, you want to protect your new car's upholstery from becoming stained. But you can handle that yourself with a can of Scotchgard. That way, you're spending a few bucks rather than the $100-plus that the dealer is likely to charge you. And your car probably doesn't even need it because modern vehicles typically use fabrics that wipe up quickly if you get to any spills right away.

Paint Protection:
Along with fabric protection often comes paint protection, another popular add-on sold by new car dealers. Any new car's finish should easily last five years with routine care — the length of time that most paint protection packages are guaranteed. Waxing your car regularly provides plenty of protection, and the $1,000 or more that you might spend on paint protection could be better spent on touching up any minor scratches you incur over your first five years with your car.

Vehicle Identification Number Etching:
Some car dealers offer this service, in which your vehicle identification number is chemically burned into one of your new car's windows. While your VIN is already available and identifiable on your vehicle, some insurance companies recommend this add-on. It may protect against auto theft or, more specifically, against the theft of your windshield. Check with your insurance company to see if they discount your comprehensive insurance if you have VIN etching. But also be aware that you can handle the etching yourself with an inexpensive DIY kit. Some insurance companies also offer this service for free.

Key Replacement:
It's undoubtedly true that modern car keys and keyless entry/remote start fobs are expensive to replace or reprogram and that many insurance policies don't cover them. However, check with your insurance company before signing up for this dealer option, which can be pricey. On the other hand, they may offer coverage for a fraction of the dealer option price. And if you're primarily concerned with the possibility of getting locked out of your car, consider signing up with an auto club like AAA or another roadside assistance program.

Tire, Wheel, and Glass Protection:
It applies primarily to lessees, but this kind of insurance rolled into the monthly payment will be a lifesaver at the end of the term. Many automakers offer these policies that cover any scraped wheels, cracked or chipped glass, or tires that have too much wear before they need replacing. These policies work out to about $10 to $15 per month, but if the windshield takes a hit, the car can't be returned without a factory windshield. Some car insurance doesn't always cover a factory windshield, either, so consult the addendum in your policy.

Nitrogen in Your Tires:
Yes, nitrogen seeps out of your tires at a lower rate than the standard air you pump in yourself at the gas station. It is slightly more stable under pressure as temperatures change. But unless you're prepping a NASCAR race car for a big race, you almost certainly don't need it. That extra pound of air pressure difference isn't going to affect how your tires wear or how your car handles. Save the $300 the new car dealer is charging for nitrogen, and buy an inexpensive tire gauge instead. If you keep your tire pressure healthy, you don't need nitrogen. And even if you want nitrogen, your local tire shop is happy to fill your tires with it for only about $10.

The bottom line is most people what they've picked out when car shopping at the price they expect to pay and not have to incur the cost of anything the dealer adds to make more of a profit. In the case of brand-specific warranties and service plans, wheels, and even exterior cargo attachments, it could pay to go with dealer-installed accessories because the manufacturer approves them, come with a manufacturer warranty, and won't have to be adjusted to fit the car. Instead of paying hundreds or thousands of dollars in one lump from a third party, these might be worth rolling into a monthly payment.

But other items like etching, window tint, and protectors are always done for individual cars and aren't necessarily devoted to one car. None are particularly expensive, and it's easy to shop around and add them on later. And these items are where the individual dealership earns most of the profit they keep and don't have to give the automaker a cut. So if a dealership doesn't cut the price they've added because of these minimally valuable items, it's time to walk.

And ideally, find a car that doesn't have many, if any, add ons before they're offered so you can pick and choose what best fits your needs — and doesn't add too much to the price.