This has been on my mind a while. Years actually. I never quite get to it even though every time I look for a car it involves me in an argument. Yet the world being what it is, there’s always something more important to write about.
Be prepared auto prep fee, this is your moment.
When a person goes to buy a car, attached to it is a sheet of paper. If it is looked at at all, the buyer’s eyes go to the list of what the car is equipped with or not. Then we slide down to the bottom line, called so because that’s what it is, the bottom line, it tells us what the dealer hopes you will pay for the car. It is the point from which you begin negotiating. On this paper are some large numbers. They tell you what the estimated EPA mileage is and what the estimated amount you’ll spend on gas in a given year.
Just like theaters don’t make much profit on movies, auto dealers don’t make much profit on cars. The dealer has to buy the car from the factory first before you buy it from the dealer. The factory has to make money; so does the dealer. The dealer becomes the classic middle man. There are all kinds of things the dealership will try to convince you to buy because, they’ll say they are necessary to make this car a better car for you. Maybe it’s buying the turbo-charged model. Maybe the one with pearlized paint will make your eyes pop. You’ve got kids–wouldn’t you want them to have the upgraded sound system-or wouldn’t you like to have it, to drown out their fighting?
Somewhere down in the list of the small print is the dealership’s ‘preparation fee.” Second only the the extended warranty, which no one tells you overlaps the car’s warranty for the first several years of the car so you’re paying for something for several years that comes with the car for free, the prep fee, takes the cake. “Realcartips.com calls it, “a rediculous way to charge more money for things that have to be done to sell the car.” “According to Autocheatsheet.com, it isn’t exactly a scam…” They call it “an excessive fee.”
But what is it? Carbuyingtips.com tells us that when a car comes from the factory to the dealer it has to be prepared for sale. That’s obvious in part if you’ve ever spent anytime looking at auto-haulers with their from over the cab to beyond the back wheels double layers of cars. Clearly the cars will arrive dirty or if covered with a protective coat, itwill have to be removed.
The car needs to be inspected, inside and out. After all, it has to work and while the factory tells the dealer it does, the dealer certainly wants to make sure of that detail. A three to five mile test drive makes sure it goes once started and that it goes in each gear it has. Do the lights go on and off? Do the turn signals work? The antennae has to be put on. When you turn on the radio, does it play? What about the GPS system? Did the tires lose optimum pressure bouncing around on the trailer truck? Oh yes, the license plate holder has to be screwed on. It a long list ending with a wash and a wax. The industry estimate is about 3 hours.
But as Realcartips.com rightly points out, it’s the cost of doing business. There are two choices here, one theirs, one yours. Theirs is to sell the car as is, off the trailer, at a lower price and keep their fingers crossed. No dealership I’ve ever seen, even crummy looking used car dealerships, have chosen that option. No one wants to call the family out of the house to look at the brand new $40,000 dirty car you just bought that may or may not work. Hence the profit-making dealer prep fee is the choice.
Most often the buyer, if he/she asks, hears this: “We have to charge it.” No they don’t.
Or this: “It’s a wash for us. The labor costs alone…” Well the carwash is automatic and the rest of the sales line is hooey.
Back to Autosheet.com, Pure and simple they call it “… a profit maker.” Around here the average prep charge is between $500 and $750. Multiply that by selling let’s say 125 cars a month, multiply that by 12 and the dealer has a pretty piece of your change in his pocket for things he couldn’t have sold the car to you unless he’d done.
And the cost to you isn’t what’s on the sticker. You’re going to mostly likely finance the car. Thus, for the years of your contract, now sometimes up to 7 years, you are paying finance charges on that fee. At $595 the fee with 7% financing costs you $14 per month x 12 months x the number of years of the finance contract. There’s a lot. Besides throw it away, you could do much with that money.
Dealers are now trying to get factories not to put the prep fee line on the cost sheet. They hide the fee here and there. If you don’t see it, know that it’s in there somewhere just not named. If you do some research before this very American misery of buying a car, you can find out what every single item/package on the car costs at the factory and what the standard mark up for it is charged by the dealer. If you find a few items that are too high, you’ve likely found a piece of the dealer’s preparation fee. Thus when you begin negotiating you can assume you’ve got an immediate $500 to $750 dollars to shave off the price–and you’ve only just begun.
When it comes to the DPF think of the old anti-drug commercial, “Just say no.” That’s what Consumer Reports says. “If you see a fee for preparation of the car, refuse to pay it.” After all, there are multiple numbers of dealerships. That is why a salesman’s job once you walk in the door is not to let you walk out again. the salesperson knows that you do not even have to go into a dealership. If you have time and nerves of steel you can buy a car on line and even, as my son just did, have it dropped off at your house and your trade-in picked up. COSTCO sells cars. There are car sales wholesalers. All can be used as wedges to lower your price if you choose the dealership route.
Fair is fair. Consumer reports suggests that a 3%-5% profit on a car is fair. The dealer has a right to stay in business. You however have the right to be able to pay your bills and still end up with a product that looks good and more importantly works.
Bottom line? “Take this prep charge and shove it!”
Every week Bill Gralnick, sometimes cranky, sometimes not, unburdens himself to you on political and social issues for your reading pleasure.
For more pleasure you can find his two books Mirth, Wind and Ire and More Mirth, Wind, and Ire on Kindle, Nook, and Kobo. They are published by Smashword and can be found at http://www.smashwords.com/books/view/692523 and smashwords.com/books/view/758411
Read! It good for both of us.