It has been a few years since the last time I purchased a used car from a dealer. It was never an experience I enjoyed and this latest adventure reminded me why.
Hidden dealer fees.
This trend was a new one for me. Several dealers local to me in Maryland list cars at reasonable prices. They use services like TrueCar, CarGurus, AutoTrader etc. They post a car a fair market value or slightly under making sure they are in the top search results when sorted by price.
It’s not enough that every dealer charges a processing fee of $500 these days. Several of the dealers who had these attractive prices had fees for car prep, or reconditioning fees that showed up later in the deal with the average being around $1250. These fees were mandatory and depending on what service you used you wouldn’t know until you went and starting working a purchase deal. (TrueCar reported these fees when you asked for more information on the vehicle. Saved me a lot of time and anger!)
There is some good news.
I reached out to TrueCar for this article and they were kind enough to provide some statistics on these dealer fees and the data painted a less bleak picture than I had experienced. This is their response:
All major third-party internet sites that publish used car listings do so by ingesting list price feeds from dealers. This includes TrueCar, the sites it powers for its affinity partners such as Navy Federal Credit Union, as well as the sites of our competitors in the space. These list price feeds come directly from the dealers, and the list prices they contain are controlled by the dealers. Currently, the list price feeds that power the used car marketplace on the internet are not set up to be inclusive of additional fees that may be charged by some dealers. This is the reason you will see the exact same list price for the same used car across all of the major sites.
In light of these prevailing industry norms, TrueCar makes the following disclosure on each of its published used car listings: “Unless otherwise stated separately in the vehicle details, where allowed by law, the price may not include processing, administrative, closing or similar fees.” This disclosure is included on the listings page, prior to the point where a consumer connects with the dealer to receive a price offer or engage in further discussions.
At TrueCar, we are committed to transparency so that consumers can buy smarter and drive happier. That’s why TrueCar powers the only platform in the industry that takes action to improve fee transparency. We do this by providing a complete itemization of all the fees charged by the dealer in the price offer delivered to the consumer prior to the consumer’s visit to the dealership. This way, there are no surprises at the dealership about the fees. We invite you to use the platforms of our competitors and prospect on the same used vehicle to see if you can discover the fees in the way that you immediately discovered them here. We think our used car experience is the best in the industry in terms of fee transparency, empowering consumers themselves to be the ultimate judge of price and value.
While dealers control the fees that they charge, it is worth noting that of our roughly 14,000 TrueCar Dealers, less than 13% enter added fees on top of the listing price, and of those that do, the average is just over $400. A small fraction of TrueCar Dealers, just over 1% have added fees over $1,000, so the fee you encountered here is actually an outlier within our experience. Consumers like yourself ultimately have the ability to judge the deal that is offered to them and decide whether to engage with the dealer. Here, in light of the fee disclosure that was made to you through the Navy Federal Credit Union platform, you were able to determine that the price of the car was not right for you without going to the dealership. We think that was the right outcome. If you had used a different service, you would have discovered this fee only after arriving at the dealership.Shadee Malekafzali
They also were reviewing some of the dealer’s statuses to use their service based on our research.
What are your thoughts?
I know I am disappointed that buying a vehicle isn’t more straightforward and that dishonest practices are still so prevalent. It would seem that despite years of pressure to change the overarching problem is people want cars and dealers have a monopoly on selling them to the public.
I did have some recent experience with Carvana, a car sales company looking to change the used car landscape. I won’t give too much away but the experience was enlightening and I will share that process very soon.
Share some of your experiences, good and bad, and let us know what places you have purchased vehicles from that treated you well. Check out this post on “What to look out for when buying a used car.”