Price Transparency - Crystal Clear or Smoke and Mirrors

In today’s modern environment of deepfakes, tabloid media and skewed social media, truth and transparency are becoming increasingly more desired in all day to day aspects of life. This is no less the case than when making a major purchase, namely, a vehicle.

One of the most important aspects of transparency is understanding the pricing of the vehicle. Unfortunately, many dealerships use a variety of hidden charges to modify the price of a vehicle from what is advertised, which can lead to frustration and confusion for buyers during finalization of the purchase. In this article, we'll discuss the importance of transparency in vehicle pricing and the different hidden charges that can be present.

Why is transparency in vehicle pricing important?

First, it allows buyers to make fully informed decisions about their purchase. You wouldn’t buy a brand new TV without making sure there were no extra charges or extended warranties that would push it out of your budget, for instance. When buyers have a clear understanding of the pricing, they can determine whether the vehicle is within their budget and make sure they're getting a fair deal. Second, transparency builds trust between buyers and dealers and improves the quality of the transaction immensely.

What are some hidden charges that can be present in vehicle pricing?

Dealer Fees

Dealer fees are charges that dealerships add to the price of a vehicle to cover the cost of things like paperwork, processing, and administrative tasks. These fees can vary by dealership, but they can add up quickly, and many buyers may not even be aware of them until they receive the final bill.

Destination Charges

Destination charges are fees that dealerships add to the price of a vehicle to cover the cost of shipping the vehicle from the manufacturer to the dealership. These charges can range from a few hundred to over a thousand dollars, depending on the vehicle and location of the dealership.

Advertising Fees

These are charges that dealerships add to the price of a vehicle to cover the cost of advertising and marketing the vehicle. These fees can be several hundred dollars and are often added to the price of the vehicle without the buyer's knowledge or consent.

Dealer Markup

Dealer markup is when dealerships add a markup to the price of a vehicle to increase their profit. This markup can be several thousand dollars and is often not disclosed to the buyer. Over the past couple of years due to supply chain constraints, dealer markup became a common talking point among recent shoppers. Because of the market conditions through 2021-2023, dealer markup varied significantly from dealership to dealership and could be thousands of dollars different even on the same vehicle.

Financing Charges

Fees that dealerships add to the price of a vehicle when a buyer finances their purchase through the dealership. These fees can include things like loan origination fees, interest charges, and processing fees. Buyers should be aware that they may be able to get a better financing deal by shopping around for financing from other lenders. Keep in mind also that dealers don’t all have the same lenders, so your overall financing scenario could change from one dealer to the next, even within the same manufacturer (e.g. Toyota, Chevy, Honda, etc.).

How can you ensure transparency in the pricing on your next vehicle?

Research

Buyers should research the make and model of the vehicle they're interested in and determine a fair price range based on the vehicle's age, mileage, and condition. This research can give them a better understanding of what a fair price for the vehicle should be and can help them identify any hidden charges. Additionally, researching your credit capacity if you are looking to finance and compare financing from lenders and dealers once you are looking to make the purchase.

Ask for an itemized list of charges

Buyers should ask for an itemized list of charges that includes all fees, taxes, and any other charges that will be added to the price of the vehicle. This can help them identify any hidden charges and make sure they're not paying more than they should be.

Negotiate

Buyers should negotiate the price of the vehicle and ask the dealership to remove any unnecessary fees or charges. This can help them get a fair deal and ensure that they're not paying for anything they don't need.

Bottom Line

Transparency in vehicle pricing is essential for a positive buying experience. Buyers should be aware of the different hidden charges that can be present and take steps to ensure that they're not paying more than they should be. The best way to do this is by using tools to conduct that research to make sure you are getting the absolute best deal. Hey, you just so happen to be on a website that can help you do that!

Carbeeza provides an anonymous, personalized breakdown of all of the applicable fees and payment details on any vehicle in our inventory. That way you and the dealership are on the same page when you contact them about that vehicle. Try it for yourself today and see the benefit of completely transparent pricing first hand