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Dealer Fees to Know When Buying a Car in 2020

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Don’t pat yourself on the back too early if you’ve just negotiated a great price on a new car. No, you’re not done yet — not when auto dealers can add thousands of dollars in the form of fees and products to the price of that new car, truck or SUV.

After all, there’s a reason why the term “sticker shock” comes from the auto dealership world. The good news? You don’t have to take onerous dealer fees lying down.

Sure, there are some new vehicle fees you’ll have to pay. There’s no getting around destination charges and fees that may be required by your state or county, such as title and registration costs. There are, however, good reasons to steer clear of — or negotiate — dealer add-ons such as extended warranties and GAP insurance. This story will help you understand the differences between fees you’ll have to pay, what’s negotiable, and fees you should avoid at all costs.

The auto dealer fees you must pay

You’ll see these fees on your final auto purchase bill and there’s no way around it – you have to pay them:

Destination fee

New vehicles don’t drive themselves to dealer lots (although that day may be coming).

For now, the auto manufacturer delivers the vehicle to the dealership and there’s a fee to be paid for that — one that you, the buyer, have to pay. Expect to pay hundreds, or as much as $1,000-plus, for the mandatory destination fee.

You’ll see the destination fee listed on the window sticker and there’s no point in negotiating it with the dealer, though it should be noted that some manufacturer destination fees are higher than others. You should read the sticker carefully to make sure the dealer is keeping mandatory destination fees separate from negotiable “delivery” fees. These so-called secondary destination fees, such as delivery inspection or dealer preparation fees, are negotiable. We’ll discuss them in more detail later.

Title, tag and registration fees

These are also mandatory, this time by your state or county. These fees funnel through the dealer, typically to your state’s department of motor vehicles, stamping you as the owner of your new vehicle and pays for your temporary tags that get you roadworthy.

Expect to pay as much as $250 to register and title your car, dependent on the state where you reside.

Documentation fee

Another “must pay” fee, the documentation fee is the fee the dealer charges for handling all the red tape and generating the administrative documents needed to process your new car acquisition.

You’ll see this fee in advance on your new vehicle contract and, depending on your home state, the fee can cost between $100 and $500. Some states cap the fee. You have to pay this fee, but there’s no rule that says you can’t ask the dealer to lower the price of the vehicle by the exact amount of the documentation fee. Learn more about how to negotiate car price.

Sales tax

In most states, you’ll need to pay a sales tax on your new car, truck or SUV, but the amount charged not only depends on the state where you reside, it also depends on whether your state charges for the full price of the vehicle, or the total price minus the value of any trade-in vehicle that was included in the deal.

If you purchase your vehicle out of state, you’ll pay the sales tax when you receive the vehicle and you register the vehicle in your state of primary residence.

Your sales tax depends on the tax charged by your state, but sales tax fees can generally range from 3% to 9% across the U.S., including county and local sales taxes. Many dealerships will roll sales tax into the title and registration fees we discussed earlier into one TT&L (tax, title and license) fee. Some dealers say to expect to pay between 8% and 10% of the sales price in taxes and fees. This rule of thumb applies to new and used cars.

How much car can you afford? This story might help.

Vehicle inspection fee

A new vehicle must pass certain inspections before it can be sold, based on the standards and criteria mandated by the state where the vehicle owner resides.

The fee, which is paid for by the dealer and passed on to the customer, doesn’t amount to much (about $7 to $30 per vehicle, dependent on your state.) The low fee isn’t really worth the trouble of negotiating it off of the total car price, but it is a fee that has to be paid.

These auto dealer fees should be avoided, contested or closely considered

You may see these auto dealer fees on your new vehicle contract but in most cases, you can avoid them, or at least contest them.

Advertising fee

You might think that it’s up to the dealership to pay for its own advertising and promotional costs, but you’d be wrong. The fact is, an advertising fee can appear on your new car invoice listed as a component of the vehicle’s manufacturer’s resale price or it can appear on your contract as a separate cost.

You can contest this fee and negotiate directly with the dealer — it’s not mandatory. If you don’t, you may pay several hundred dollars for the fee.

Extended warranty

Technically a product, an extended warranty covers any significant repairs needed on the vehicle after the original manufacturer’s warranty expires.

You don’t have to pay for an extended warranty, so feel free to avoid it altogether.

If you change your mind, and decide that an extended warranty is worth the cost, you can also go back to the dealer and buy the warranty later, but before the original warranty expires. The cost of an extended warranty isn’t cheap — anywhere from about $1,000 to several thousand dollars — but compare that with the cost of paying $4,500 for a new engine after the original warranty expires.

Dealer preparation fee

Often, auto dealers will charge a dealer preparation fee for cleaning up the car for you before you drive it off the lot. There is absolutely no need to pay this fee, which can range from $100 to $400.

Think of the fee this way — why should you pay extra for a fee to clean up a new vehicle that you just paid $35,000 to purchase? Shouldn’t the car appear clean, shiny and free of any problems at closing? Take the mindset that, yes, it should, and fight the fee accordingly.

Rustproofing and undercoating fee

Dealers will also try to stick you with so-called “treatment” fees that protect against Mother Nature and rocky roadways. The fee, which can cost around $800 to the dealer, aren’t really necessary in this day and age, as manufacturing technology has provided better protection for undercarriages and vehicle exteriors.

The dealer may also charge for other “appearance” packages including window tinting and tire and wheel warranties. These are also optional, so consider each one carefully, including cost and how important they are to you.

GAP insurance costs

In some cases, buying GAP insurance if you’re buying a new vehicle and want to add extra protection may be a good idea — it can cover the “gap” between an auto insurance claim payment and the amount of money owed on a heavily damaged or destroyed vehicle.

The thing is, you don’t have to buy it from the lender or dealer. In doing so, costs can be as high as $700 or more and is rolled in to your car loan, which also includes interest paid on the total loan, boosting the GAP insurance price up higher. Better to shop around among insurance companies who’ll likely offer you a better deal and cut out the dealer altogether from GAP insurance.

VIN etching fee

Your dealer may also try to sell you a theft-protection tool called vehicle identification etching, or “VIN” fee, which covers the cost of etching your VIN on the vehicle’s front window to thwart auto thieves.

While it’s always a good idea to protect your vehicle anyway you can, there’s no reason to have the dealer do the etching for $200 or more, when it only costs them $25 to do the job. A mechanic can do the job for much less. Some counties will offer the service free, so check with your local government office.

Stand your ground

When you’re in the throes of love for that brand-new vehicle you just purchased, it’s easy to gloss over fees and extra costs that dealers love to charge to pad their bottom line.

Don’t fall for many of those fees. While some extra costs are mandatory, there are plenty of new car dealer fees than can and should be avoided.

Stand your ground and use the tips above to make sure you’re not paying more than you should for your new car. Dealers also love to pad your APR, so in addition to the fees we described here, don’t make these common mistakes when shopping for an auto loan. Before heading to the lot, research the best auto loan rates.


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Checking vs Savings Accounts: What Are the Biggest Differences?

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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There’s no doubt that Americans rely on banks to better manage their savings. In fact, the average American household has $175,510 worth of savings in bank accounts and retirement savings accounts, according to our recent analysis.

The primary bank account vehicles for consumers are checking and savings accounts. Both give financial consumers a protective place to park their money, yet each are best used for different purposes.

While there are multiple differences between the two types of consumer bank accounts, the primary difference between checking vs savings accounts can be found in the way each account is structured.

Checking vs. savings accounts: Key differences

The differences between checking and savings accounts go deeper than basic saving and spending. Via the chart below, let’s take a deep dive on both types of bank accounts and examine what each does effectively, and how they vary from one another.

Best used for Cash you want to keep safe but still take advantage of higher interest rates; Short-term expensesDaily spending needs
Minimum balance requirementUsually no minimum required for basic savings accounts. Basic checking accounts rarely require a minimum deposit amount, but may charge a maintenance fee if you don’t keep a certain amount in your account.
Interest1.52% APY average for online banks0.19% APY on average overall
Typical fees-Excessive withdrawal fee
-Overdraft fee
-Overdraft fee
-Monthly maintenance fee
Withdrawal limitsLimited to six withdrawals per month or you an risk excessive withdrawal feeNo limits on numbers of transactions per month typically

Let’s flesh out the similarities and the major differences between checking and savings accounts, using the primary chart topics listed above:

Usage. Bank savings and checking accounts exist for different reasons.
Savings accounts are designed to save money over a long period of time, enhanced by interest paid to the customer by banks and credit unions, for the right to have their money held on deposit. Savings accounts are not designed to be used on a daily basis – they’re accounts built for the long haul.

Checking accounts are designed for everyday usage, to pay bills, to spend on household needs like food, clothing, day care or any consumer financial expenses the checking account holder must cover. The checking account acts as a financial intermediary for the consumer, who uses the account to handle financial transactions and to both receive and disburse money.

Minimum balances. Savings and checking accounts differ in minimum balance requirements. While most bank checking accounts don’t require a minimum balance, and most banks don’t require a minimum deposit for basic deposit savings account, certificates of deposit and money market accounts are a different story. For example, some money market accounts may require a minimum deposit of up to $2,500 to open an account.

Interest payments. Banks can pay interest for both savings and checking accounts, but typically savings accounts earn higher rates. In early 2019, for example, the average bank checking account pays up to 0.81%, according to the U.S. Federal Deposit Insurance Corporation (FDIC) . It’s worth noting that many banks don’t pay interest on checking accounts anymore, but online banks are more likely to do so.

Meanwhile, the average bank savings account pays up to 0.84%, according to the FDIC. You can easily get rates above 2% APY if you’re willing to check out online bank offerings.

Typical fees. The “fee factor” between saving and checking accounts matters, too.

By and large, banks don’t charge high fees for basic savings deposit accounts – they can expect to pay a nominal account opening fee of $25 and a monthly maintenance fee of around $5. Also, banks may charge account minimum fees for money market and CD accounts. Many banks are actually doing away with basic savings accounts fees — check with your financial institution and see if they charge a savings account fee. If they do so, ask them how you can waive the fee – they’ll likely have options for you to do so.

Checking account fees can really stack up, however. In the normal course of business, checking account maintenance fees, minimum balance fees, overdraft fees, return deposit fees, ATM fees and paper statement fees can eliminate any gains your making from the nominal interest rate paid out by banks.

It’s always a good idea to talk to your bank directly about eliminating checking account fees, too. For example, agreeing to overdraft protection can help you curb pricey overdraft fees and agreeing to have your monthly statement presented online can eliminate paper statement fees.

Online bill pay. Bank checking accounts now consider online bill pay as a basic service for checking account customers, including mobile bill pay options. Bank savings accounts, which don’t want you dipping into account savings, don’t offer online bill payment for customers, although customers with a savings account can transfer funds into a checking account to cover bills.

Types of savings accounts

Savings accounts are designed specifically to do what their names suggests – save money. The amount of money saved depends on the customer, but a bank savings consumer can choose from three main types of saving account options:

A standard savings account is a type of deposit account that offers a higher interest rate thank a checking account typically.The standard limitation with savings is that you are limited to six withdrawals or transfers per month, or risk getting hit with fees.

CDs are savings vehicles designed to hold money for a longer period of time than traditional savings accounts, and frequently pay higher interest than deposit accounts. But they require you to typically lock up your funds for set periods of time and often charge penalties if you withdraw the funds before the term is up.

Lastly, money market accounts pay consumers the highest interest rates, and require a significantly higher initial account deposit than with other deposit accounts.

Types of checking accounts

Checking accounts are designed for an alternative, yet equally important purpose — to act as a financial tool to manage daily living expenses, like bill-paying, grocery shopping, recreational spending and other consumer financial needs.

As opposed to savings accounts, which are built for the long haul, checking accounts are designed to be used on a regular basis.

Checking vs. savings: How to choose

While bank checking accounts and savings accounts do have differences, especially on spending versus saving money, the best approach is to open both accounts with your financial institution.

Aside from saving money on fees (banks routinely cut some fees if you have active checking and savings accounts with them), you can transfer money between the two accounts, have a designated account for spending and a dedicated account for savings at the same financial institution, and tie your basic spending and savings needs into one neat bundle.

That’s a win-win scenario for any bank consumer.

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Auto Loan

Motorcycle Lease vs. Loan: Which Should You Choose?

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Motorcycle lease or loan
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Many two-wheel roadsters might pay cash for that chopper thanks to a wide selection of motorcycles in the four-figure range. But perhaps you have your eye on Harley-Davidson’s forthcoming $30,000 electric bike or something in between. What’s the better deal — leasing or buying? Each option has its pros and cons. Let’s look at a motorcycle lease vs. a loan.

Motorcycle loans at a glance

  • More common than a lease, motorcycle loan options are available through banks, credit unions, online lenders or the manufacturer itself.
  • Terms generally ranged from 24 to 84 months, at time of publication.
  • APRs at time of publication ranged from 4.69% to 12.24%.

Getting a loan for a motorcycle gives you a single big advantage over leasing a bike: Once you pay the loan, you own the motorcycle outright. That gives you more options than with a lease — you can keep the bike, sell it, or trade it in for another bike, reducing the cost of purchasing a new motorcycle.

Bike owners may also want to customize their motorcycle, or give it a colorful new paint job, something that isn’t allowed with a leased bike. Wear and tear is an issue that bike owners don’t have to stress over, as opposed to riders who lease a bike and have to pay close attention to wear and tear, and must return the machine in good condition or else pay fees.

Pros and cons of a motorcycle loan

Like any large financial purchase, motorcycle loans have their upsides and downsides – here’s a quick snapshot:


  • As an owner, you can customize or personalize your machine without having to worry about running afoul of leasing agreements.
  • Access to dealer and manufacturer sales and rebates — read more about these in our guide to motorcycle loans.


  • Monthly motorcycle loan payments are typically higher than lease payments.
  • Like any vehicle purchase, the best rates generally go to those with the best credit.
  • If you don’t like the bike for whatever reason, you could be stuck with it for a long time, unless you resell it.

Motorcycle leasing at a glance

  • Unlike car leasing, most motorcycle manufacturers don’t offer leasing programs, though some dealerships do, in addition to leasing companies.
  • Terms range up to 60 months, at time of publication.

The most significant advantage of leasing a motorcycle instead of buying one is cost — it’s significantly less expensive to lease a bike than to take out a loan, especially when some motorcycles can cost $10,000 to $35,000 and up, though there are plenty of bikes well under those prices as well.

After the lease is up, you typically have several choices: simply return the bike to the dealer; return the bike and lease another; or buy it outright if you really like the make and model.

Pros and cons of a motorcycle lease

Leasing a motorcycle also has its upsides and downsides – here’s a look both scenarios:


  • With a lease, you’re getting the benefits of riding a new or new-to-you bike without a heavy financial commitment.
  • Leasing means you can change bikes every few years.
  • You might get a better bike than you otherwise might be able to afford to buy outright.


  • Motorcycle leases can be difficult to find, whereas bike loans are widely available.
  • Not every motorcycle make and model is available for leasing – that could keep you from getting the bike you want.
  • Heavy fees are associated with leasing a motorcycle, especially charges incurred when you wish to end a bike lease early.
  • A bike lessee will have to look out for mileage fees as well. Many leases come with a 15,000 miles-per-year limit; you’ll be charged a fee for exceeding that limit.
  • The motorcycle dealer may insist you buy pricey gap insurance before you can sign a lease. Insurance protects the owner (the dealer, in this example) if the bike is stolen or heavily damaged.
  • At the end of the lease, you won’t have ownership of the machine unless you decide to buy it.

Leasing makes sense when:

  • You only want a bike for a few years. If you’re into a bike for the long haul, getting a loan and buying it is preferable to leasing.
  • If you’re concerned about the high cost of a motorcycle. Motorcycle lease payments are typically lower than loan payments.

Buying makes sense when:

  • You feel like you might be lax in the care and maintenance of your motorcycle. With a lease, the dealer will require you to take special care of the bike — after all, they own it — which will add to your total motorcycle cost.
  • You want to personalize or customize a motorcycle. In a lease deal, the dealer may force you to keep the bike as is, and not allow any changes to the bike.
  • You plan on driving the motorcycle great distances and might exceed lease mileage limits.

The bottom line

Deciding whether to take out a loan and buy a motorcycle or lease one instead is a personal decision where the main factors of price, quality and maintenance all come into play, as an owner or a lessee.

Job one is to get out there and kick some tires, do your research, and talk to people who have purchased a motorcycle or leased one instead. There’s no voice like the voice of experience, so engage with other motorcycle enthusiasts on what worked for them, and what should work given your unique needs.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.