Dealer Fees

[pascrelg]

I was told by two different sales people in northern New Jersey that my Invoice price did not include what was referred to as MACO or MAKO fees and also training fees? Has anyone heard of these BMW fees? I think they both totaled around $500.

On a side note, one dealer told me he could not order me terra cotta interior, said it wasn't offered on the website...even though the car I test drove at his dealership had a terra cotta interior...

Thanks.

G.

Here is what I found online:

"ADM" or "ADP" Charges (Additional Dealer Markup)
Bogus charges added by greedy dealers. It means "Additional Dealer Markup" or "Additional Dealer Profit", and appears on a sticker next to manufacturer's MSRP sticker. I call it Arrogant Dealer Markup. ADM is an artificial buffer to bargain down the price. If ADM is $1000 and you talk them down $800, you still paid MSRP plus $200 for the car! If you see this toxic waste, have them nix it. One buyer of a Honda Civic got the dealer to drop a $1995 ADM! But what if she had no idea what was going on?
Advertising Fees
Usually when you buy through discount sites like InvoiceDealers, Cars.com, Yahoo!Autos, Autos.com, Edmunds.com, MyRide.com and CarsDirect you avoid ad fees. Car makers charge dealers for regional and national advertising campaigns. These charges are reflected on the invoice and are a legitimate cost of doing business. This is where opinions differ, as I feel it's their cost of doing business, not ours. Tell them to pay your fees like gas, wear and tear, and your time for driving all over town to shop for the car. Many dealers are sticklers about this fee, and it's difficult to get them to drop it, but some do waive the fee. If a dealer adds on their own advertising fee above and beyond this, they are out of bounds. Dealers try to charge $250-$1000, but it should not be more than $250. You're not paying for their inability to find cost effective ads. $1000 ad fees allow the dealer to charge you a lower price on the car. You think you're saving money, but ad fees take it right back. This fee may also show up as "Sales Promotion Fund", or DAA, or ADA, or anything referring to ads. Edmund's says it's non-negotiable, but they are wrong. Anything in life is negotiable, and I don't give up that easily. What angers me the most is the cryptic way that dealers hide this fee from you by using huge acronyms, then playing stupid when you question it. "Duh, I don't know, we always charge this fee". A Nissan Dealer in Chicago told one of our visitors that they have to charge the Nissan advertisement fee and can't drop it or they can face a class action law suit. Nice scam. Where's my bull icon?
Ford dealers use the cryptic term "FDAF/LMDA" on their invoice. "FDAF" stands for "Ford Dealer Advertising Fund", and the "LMDA" stands for Lincoln Mercury Dealer Advertising. Why can't they just disclose it as "ad fee"? I didn't pay an ad fee for my Lexus in 1998 or the Mazda Millenia in 1999. Honda add fees are built into the invoice price, don't let them charge you extra. Other companies choose their own cryptic acronym, like DAA (Dealer Area Advertising), TDA (Toyota Dealer Advertising Fee), HDA, you get the picture. If it ends with an "A", it's most likely an advertising fee. Speaking of advertising, dealers are neither grateful nor shy about plastering their name on the trunk of your shiny new car at a cost of $0 to them. You then spend the next several years advertising their dealership free of charge with your moving billboard. You should charge them a $600 advertising fee for that.
"Dealer Floorplan Assistance" Fees/Wholesale Financial Reserves/Dealer Interest Fee
Some dealers charge this fee, which is icing on the cake. Have them remove this insult. Dealer Floorplan Interest is the interest that dealers pay for loans to buy the cars on their lot. Usually the factory pays this as part of the holdback, itemized as a separate invoice item. Floorplan interest can cost $150 per month for each car. On an Eclipse invoice I have, the factory gave the dealer $185 in floor plan assistance, and the dealer itemized it to the buyer as a fee, double collecting for $370! The factory gives the dealer 1-2 months of interest. The longer the car sits unsold on the lot, the more $150 interest checks the dealer pays. They want you to "assist" them in "paying it", which is the factory's expense, not yours. Dealers know we are on to them, so some have changed the name to a confusing term called "Wholesale Financial Reserves." or "Dealer Interest Fee".
"Dealer Markup Value" Fees in Hawaii
Dealers in Hawaii charge a "DEALER MARKUP VALUE," fee of $1000-$5000 over the selling price. They claim it offsets "high" transporting costs from the US mainland to Hawaii. Our visitors have bought cars in Los Angeles and shipped to Hawaii for $895. If my geography serves me correctly, Japan is closer to Hawaii than the US, so it should be cheaper to send Japanese imports from Japan to Hawaii. I suggest you let them charge no more than $600.
Dealer Prep
The most common scam, because it's so believable. They act like a team of NASA experts performed a 3 day 15,000 point check of your car. Dealer prep "covers their cost" of removing plastic films on the seats, vacuuming the car, and preparing it for sale, done by their lowest paid employee. But most MSRP stickers show these costs are covered by the car maker. Here's the MSRP sticker from my Lexus SC300:


See What I mean?The factory pays the dealer for this pre-delivery service. When my Lexus SC300 arrived, it took the dealer 2 hours to peel the film, remove cardboard, install fuses, check the liquids, perform a 10 mile test drive, and hand me the keys. If a dealer charges a $500 dealer prep, you're paying them $250 per hour! Are you boiling mad yet? Often it's permanently printed on the buyer's form to make you think it's mandatory, but nearly everyone I know is able to make the dealer drop it by adding a credit to the next line. If they refuse to remove it, just walk. Tell them you want to see if the other local dealers will drop the fee.
Destination Charge
Dealers pay a destination charges to have cars delivered on auto transport trucks. For my 1998 Lexus SC300, it's $495, passed on to us. This is one of the few legitimate fees. Verify the amount with online pricing sites before you go in to buy.
Documentation Fees
Expenses like registration, tags, title, and other state fees. Determine the fees your state charges before you go shopping. Call the Department of Motor Vehicles to determine the cost of registering a new car, and getting the tags if necessary. It may be cheaper to transfer the tag from your old car to the new one. Once you know all documentation fees, determine if the dealer is padding the charge. Have the salesman give a breakdown of every fee in writing.
Drive off Deposit
A bogus fee that greediest of dealerships pile on those with bad credit. The purpose of this fee is to steal your rebate from you. One reader had a $900 rebate on his car, but the dealer stole it right back with a $900 drive off deposit. What does "Drive Off Deposit" mean? Nothing, it's a meaningless term. If you see a drive off deposit on your worksheet, just drive off, no deposit.
Window VIN# Etching Fee
A stupid fee for etching the VIN# or other anti theft information into your side windows. It costs next to nothing for the dealer to do it, and the average fee is about $300. You can buy same kit in auto parts stores for $20, and do it yourself.
Factory Holdback
US auto makers pay dealers a "factory holdback" of 3% MSRP on every car sold. Mercedes pays 3%, Lexus is 2%, but Edmunds claims Lexus has no holdback. BMW, Japanese imports, etc., pay 2% quarterly to the dealership. It's called holdback, because the factory holds back money from the dealer until they sell the car. This is accounted for by charging the dealer for holdback on the invoice, paying them back when the car is sold. On a $30,000 car, the holdback is $900. This appears to you and me as though the dealer paid $900 more for the car than he did. This is done by the factory as a means to compensate dealers for interest on loans that they take out to buy the cars from the factory, and also to provide a little bit of profit to the dealer. The holdback is included in every invoice price. This is how dealers can sell you a car at invoice, because the factory refunds them the holdback once the car is sold. They can sell you a $30,000 car at invoice and have a $900 positive cash flow. Many people don't know holdback exists, including many car salesman, as this goes directly to the dealer, and it effectively reduces the dealer's cost of the car. Many dealers deny it exists, or tell the customer it's a dealer expense, and try to add it on to the contract make the customer "pay" for it. It's the factory's expense once the car is sold. Now the dealer is double collecting. If any dealer tries to itemize you separately for holdback, leave immediately, you'll surely be subject to many more unscrupulous tricks. Don't let a dealer tell you there's no holdback, it's the business plan that the whole industry is structured to. Denial is a popular trick used by dealers in Hawaii. But many good car dealers list holdback on their web sites.
LieNance Managers
That's my funny name for some Finance Managers who lie and cheat, for example, telling you that your credit score is too low to get a good APR, or telling you that the bank requires you to buy a warranty, gap insurance, VIN etch, or credit life in order for you to get the loan.
Port Prep Fee or Port Installed Options (PIO)
These are fees for prep or options installed at the port of entry by the manufacturer. For example, Toyota has a Port Installed Option added to the cars once they land in Florida called ToyoGuard, an extremely overpriced rubberized coating sprayed inside your wheel wells to prevent rust. Sometimes this adds up to $600 your Toyota. Some port prep fees might only be $25. VW in Washington D.C. seems to have some PIOs that are unavoidable too..
Registration Fees
That's a tough one to determine, each state is different. There may also be small tire and battery fees around $10 levied by the state. In Florida, it's cheaper to transfer your plates from the trade-in to the new car, about $50 instead of $180 for new plates. Some states charge hundreds, so check with your DMV before going shopping. Print out the DMV fees online and bring them to the dealer. Quite often dealer charge up to $400 "document fees" supposedly to handle paperwork transfer of the plate, done by their lowest paid secretary. Give me a break.
Washington Association Fee
Buyers in Washington D.C. buying a Volkswagen said the dealer tried to charge a $175 Washington Association Fee claiming it was "the cost that the manufacturer charged them for doing business in this area". We don't know if this is a valid fee or not. It sure sounds like a bogus charge to me.

[Tom K.]

If you have been quoted Invoice + a $500.00 fee, grab it quick! If you meant MSRP (Sticker price) rather than invoice, then $500 over is out of line and you should walk. Whether it's called MACO, ADP, Processing Charge, etc. is immaterial.
Tom

[BMW Dreamer]

I have e-mailed back and forth with a dealer that said they would charge my $190 TOTAL for doc, lic, title, plus tax. No MACO, training or anything else, and $500 off MSRP. Call diff dealers and ask what the extra's are, everything.

[bhobson333]

Mine was MSRP + sales tax plus $55 state registration fee + $400 documentation. No training, no markup. Of course I was buying off the lot not ordering, so I was more in a position of strength than someone ordering a hot-selling car they're not going to get for a few months.

[dbtheo]

• maco
• training service fee

both legit, whether or not you like them

doc fees are legit too, but will vary in amount. Typically from $115 up to about $300.

[HeyMoe53]

Tough call. If I got all of that thrown at me, I might just walk. I don't HAVE to have the car.

[ArBrnSnpr]

Very educational reading here. I saved the dealer fees explenation.

[BMW Dreamer]

Originally Posted by dbtheo

• maco
• training service fee

both legit, whether or not you like them

doc fees are legit too, but will vary in amount. Typically from $115 up to about $300.

YEP. I was quoted $150 Doc fee and lic, title, total $190 and tax. No MACO or training. You need to shop around.


When I first e-mailed this dealer above I explained how I know about some dealers adding MACO and training fees, and others not adding extras. I told them I need to know all the extras besides just tax. And the best offer on the options I wanted, which I also told them. It took them a few e-mails to finally give me all the numbers. I think they were eliminating the fees and adding to the cost of the car. So they finally gave me just Doc $150 and $40 for lic and transfer, and $500 off MSRP for a $40,400 135i. Not bad, but I want $1,000 off MSRP.

[jeremyc74]

I'm paying MSRP for the car. If they try to tack all the stuff on I'm going to walk down the street (because I'm going to have to take a cab to the dealership after this weekend) and buy a Vette.

How far do you think they'll let me get before they back off of the fees?

[jdesclafani]

i had a $490 dealer fee added on after the price of the car...im going to pick it up today...is this a load of shit...should i argue and have it taken off...

[ptack]

Check any car buying guide or site. Additional dealer fees such as "prep" or "rust proofing" are nothing but profit scams. They are not standardized by the manufacturer which means that each dealer can try to add on whatever extra trick they can think of to maximize their profit on each sale. They do not provide you with any extra value what so ever. Sharp buyers will negotiate these out, innocent buyers will just pay. I currently have a salesman telling me that the reason his cost is higher than my calculation is that his dealer adds an extra $380 advertising fee on every car. That's another of those bullsh@* ways that dealers try to pocket some extra money. What you need to do is carefully calculate the total cost you're willing to pay and use these gambits in the negotiation. For example; I might be willing to pay the "advertising fee" if they get me financing at 5% or better because the difference in rates could more than pay for the fee.

[pascrelg]

Actually my deal is about 1,600 over invoice at this point, but I am trying to get a better deal. One guy from manhattan told me we only sell at retail. I thanked him and hung up. He called me back 5 minutes later and said he would offer me invoice plus 1,800. My only advice to all of you is deal people deal! Set your price and go for it...within reason of course. thanks for your feedback, i still am not sure what a training fee is...

[mrgoochio]

BTW the 1series has Terra, not Terracotta, theyre different colors. He should be able to order it if its a pre/custom order as a priority 1 option.