The fees you should never pay at a new car dealership

HOUSTON – After your home, your car is one of the most expensive purchases you will ever make. But the financing can be so confusing, most consumers just grit their teeth and get it over with as quickly as possible. 
Consumer expert Amy Davis says you should slow down and look for fees that you should not have to pay.  

Tax, title and licensing fees and gap insurance: They're all items you will see on your sales contract at any car dealership. Most of them are required by the state of Texas, but Don Kerstetter of Katy Nissan said you have to look at all of the charges closely.

"It's very important to watch for items that might be added in that same column of figures that are not required by the state of Texas but are presented as if they are," said Kerstetter. 

You will have to pay a documentation fee, but the state of Texas caps it at $150. The "destination charge" covers the shipment of the vehicle from the manufacturer to the dealer, but additional dealer prep fees for getting the car ready are bogus. 

"The dealer is paid by the manufacturer to complete the delivery process for the customer. It's called pre-delivery inspection or PDI," explained Kerstetter. That's why Kerstetter says the consumer should not have to fork over additional fees to get the car ready to sell. 
 
Items like window tint, VIN etching and pin striping should always be optional and fully disclosed on the sticker of the car. 

"Unfortunately, in some cases, they are already added to the car and so, that's where your negotiation starts," Kerstetter said. 

You can try to get more money taken off of the price off the vehicle because you didn't ask for those optional items. 

"But the key is are you buying it from a dealership that's gonna disclose that properly to you before you buy the car?" Kerstetter told Davis.  "Or are they gonna try to spring that on you during the closing process after you've already made an emotional commitment to buying the car?" 

Keep in mind, you will pay interest on all of the taxes and fees unless you pay those up front before financing.

Consumer Reports explains the fees you will have to pay and the fees you should not pay on the website.


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Passionate consumer advocate, mom of 3, addicted to coffee, hairspray and pastries.