"Processing fee" for a used car?


#1

Okay, I am probably setting myself up by asking this question or raising this topic, but here goes . . . What do folks have to say about used car dealers tacking on $495 (or thereabouts) “processing fees” onto the price of a used car? Where’s the processing?


#2

If it’s for paperwork, IMHO it’s a scam. If it includes state fees, it’s legit. Can’t tell from here.
Unless it’s for state fees, the reason they charge separately is to keep the selling price as low as possible then “pack on” their profits. Bandits work that way.


#3

No, these fees are definitely over and above the state title, tax, registration fees.


#4

Any FEE is just part of the price. The idea behind it is that people are more apt pay a fee then just a higher price. People would rather pay $25k with a $500 fee then pay $25,200 with $0 fee. It’s one of the many games dealers (new and used) play with customers. Stupid - YES.

I ALWAYS ask - what’s the FINAL cost (fees included). And then I negotiate from there. Once I negotiate a price I do NOT allow them to add any “Fees”.


#5

Never heard of it but then again I don’t get excited about line item costs. All you need to look at is the bottom line. Just like a hospital where an aspirin costs $2. It doesn’t really matter, its the total bottom line cost you have to look at, and if that’s not acceptable, move on to another dealer.


#6

Bing and I are saying the same thing…Only Bing set it better.


#7

B&M ,good responses-I dont do value added tax or hard to obtain,fees-Kevin


#8

If someone asked me to go out into the world and find them a used car that fit what they wanted, including price range, and was in decent condition with no reasonable expectation of immediate major issues - I’d probably want to charge them about 500 bucks for the time, aggravation, and knowledge required to do so. Of course, I don’t know if that’s how any dealers define a “processing fee” but it’s no different from things like inflated shipping & handling charges that support lower price appearances.

On the couple of occasions I’ve bought used from a dealer I’ve always decided on what I wanted to pay, gave them the number and said get me out the door for not a penny more than that and we’ve got a deal. This often works quite well if you can make full payment on the spot - like cash is always pretty good at moving this kind of thing along.


#9

Pure bunk!! Our last car purchase only had a $26.25 tire recycling fee and $84 for the license (ownership certificate) and plates.

The car had to be obtained from another dealer 185 miles away and they tried to stick me with the $200 or so “shipping fee”. I told hem to stuff it an started walking out the door. They quickly stopped me and said they would “absorb” this cost.


#10

Since so damn many people are now griping and moaning about the profit margins in car sales…they have to break it down and itemize it to justify it . People can’t just accept the fact that those dollars included in a single mark-up are all justified without you spilling your guts about all the bookkeeping ledger entries that need to be filled in.
— Same as the airlines and hospitals now.
If youall can’t accept the fact that profit must be made on a single line entry, then you’ll just have to accept the itemized individual entries.


#11

RTD is sneaky too.


#12

Yep you won’t stay in business long if you don’t make a profit. Its not a dirty word, just payment for performance. Not to get way off topic but we had an influx of people that moved to town some years ago and in their culture they did not believe in profit or in paying interest on loans. They had no trouble with a loan but would not pay interest. So they had a hard time buying cars or houses. Somehow the leadership worked a way out to change the terms so that it didn’t look like profit or interest. Same price but just fit their religion better when it was called something else. People have to expect to pay other people for their labor regardless of what you call it.


#13

Bandits. Definitely bandits. But if you look up “bandits” in the dictionary I probably lists “used car dealers” under the definitions. They’ll con you out of every penny they can. Fortunately, you can refuse. There are other cars out there.


#14

Call it what you will, “bait & switch”, “loss leader”, it is misleading. Here the price the dealer is prepared to sell the car for includes his profit, however you have to sit through all the pitches of add-ons such as $100 wax jobs, additional “insurance & warranty”, etc. Those things are very profitable and the salesman gets a good chunk of this.

When I bought our Mazda the salesman pitched their low interest financing (for which he would get a commission), and would not let up even after I told his I was paying CASH! "

He said they could beat my bank’s rate and I had to tell him I was not borowing from the bank. To this day he can’t believe that the bank draft was just that, money transferred from my account to the dealer to pay for te car.

The average car buyer buys at least some of these add-ons.


#15

What’s the processing fee for? Impossible, you’ll never be able to find out. Better to cut a deal in a way so that you don’t need to even have that information.

When I was a kid my dad would take me whenever he was buying a new car, he’d let me watch the deal get made. He always made his offer to the car dealer like this: “I’ll write you a check for $2500, on the road, how’s that?”. ($2500 seem to low of price for a new car? Remember, this was the 60’s.) That phrase “on the road” meant it included everything, taxes, insurance, and all other fees. In other words a $2500 check got him a clear title and the right to drive it off the lot.

Suggest you try something like that next time; i.e. focus on the total cost to you, not the separate parts. Then you don’t need to know what the processing fee is for.


#16

@ Ken Green,dont worry the dealers around here will be the last ones that starve,one cat owns about all the dealerships in the Harrisonburg"motormile" and I was amazed that I never could buy a vehicle there,BTW a large percentage of doctors fees are administrative and most doctors around here are the only ones that have hunting camps,airplanes and horse farms,etc.Some fees are really creative,but that’s capitalism I suppose-Kevin


#17

Let’s see, sales tax, title, trade in values, MSRP, whole sale price, processing fee, designation charges, prep fee, extended warranties etc. ; you guys are right. There are so many add ons put in place to confuse the issue, the poor buyer walks out the door spending $25k for a car advertised for $21k.

It’s hard to do, but focus. Ask them for a final price that ncludes everything. Pretend you have the money you want to pay, in your pocket as you speak. It’s the price you want to pay for the car compared to their final price. Now start negotiating. You have access to no more money. If You plan on paying $22k for that advertized $21k car because you did all the gazintas and found it was a fair price including “everything”, tell them that at some point during negotiations. You can say, I’m not a mint and I can’t make any more money. If we agree on this price we can do business NOW. Otherwise, we look elsewhere.

You have to do the research and expect them to come to you not the other way around. It’s fine if they don’t . There are other cars out there. But, to be successful, you need to sell the idea that for the right price, you will deal NOW. I have lost out on buying a lot of cars that I liked doing this. But, when we finally did buy, we felt good about the sale and the car we bought.


#18

It’s also called a “Doc Fee” and most dealers charge it. You have to play hardball during negotiations if you want it to go away.
Most dealers have a person dedicated to handling the paperwork and title issues so it’s an expense the dealer must cover with a fee or by a higher price on the car itself.

The principle is the same as an airline charging X dollars for each checked bag with the only difference being that there is no negotiating with the airline.


#19

What is RTD?


#20

Yes, what is RTD?-Kevin