When I help people buy cars, they often ask: “How much money can I expect to save here?” It’s an excellent question, but it’s the wrong way to look at whether or not you are getting a good deal.
I’ve frequently stressed the need to get an itemized out-the-door price quote for any car you buy. This will give you a clear picture of what kind of savings you are being offered, and an understanding of any additional costs like taxes and DMV fees that are included in the total price.
Whenever I am shopping on behalf of a client I request a full breakdown from the dealers that are bidding for the deal. Some dealers are reluctant to provide this—usually because they are hiding something. A few times I have had some stores pad up the total quote with inflated dealer fees and some overpriced extras. This is known in the industry as payment packing.
Often what happens is that the dealer will discount the car by a certain amount, and then neutralize that discount by adding in things like GAP insurance, service plans, and extended warranties that bake in all kinds of extra profit. More often than not these things are a waste of money, but there are times when these extras are worth it. However, they should be discussed with the customer and authorized before they are added into the quote.
However, in all my years of shopping for cars I have never seen a quote so egregious and ridiculous as the one below.
Recently I was shopping for a brand new 2017 Corvette Grand Sport for a customer in California. A local dealer sent me the following:
Let’s have a look at this quote line by line. The MSRP on the car is $74,765. The dealer is offering a discount of $5,780 and there is a $1,500 rebate from Chevrolet, bringing the total discount $7,280. That seems pretty good for a brand new Corvette.
Then we have a dealer fee of $449, a California tire fee of $8.75 and a documentation fee of $80. All of which are within a reasonable range for additional fees in order to process the paperwork for the loan and registration.
It all goes downhill from there. There is a random non-taxable fee of $131, a “VSA fee” of a whopping $3,500 (I have no idea what this is or why it costs this much), a “Perma Plate” for $995 (license plates are already included in the DMV fees), a GAP insurance policy of $995 and a “maintenance” fee of $2,495 (You don’t really need a maintenance plan on a Corvette.) The grand total for all this comes to an extra $8,116 tacked on!
Needless to say after seeing all this, I didn’t continue the conversation any further. I then got a price on a similar car from another California dealer. This is how a quote should look:
Not only is the dealer discount dramatically more, there are no excessive fees. Both cars have had a very similar MSRP, yet the first store payment packed their quote, making the net price almost $10,000 more.
Dealers like the first one don’t deserve your business, but the second store clearly understands how to sell a car without any games. The only way to get the right deal is to put in the work and compare each quote line by line. You should always question charges you don’t understand.