Over the years the motor industry has seen its profit margins from the sale of new cars eroded by numerous market and social conditions. In fact, it’s not unheard of for new cars in the UK to be sold sometimes at cost, or even a small loss, to achieve greater future profit opportunities. On this basis the car dealer has had to become sharper, quicker and more inventive in how they retain or improve their profit when transacting with consumers.
We as consumers have also changed. We’ve become, more savvy, more aware and more empowered, not least by the power of the wonderful world wide web. But it doesn’t mean we know everything…..
There has been a growing trend that I have noticed on my travels around the industry over the last few years, to increase profit from customers in the most blatant of methods. So blatant in fact, that some customers actually accept the practice and do not question it. What is this new profit stream for car dealers? It’s called the Administration Charge or Administration Fee.
Some car dealers are placing charges on invoices for Administration Fees which they will tell you are to cover the cost of completing documentation and checks and whatever waffle they decide to use to justify this cost.
If this is the case at your chosen dealership or used car centre – WALK AWAY! or at least REFUSE TO PAY the fee.
Admin Charges are an utter nonsense for you as the consumer. In order for the dealer to sell you a car they must, legally complete certain documentation in order to satisfy revenue and customs, the DVLA and British Law (among other things and I am certain this would also apply in the US). Therefore, without them completing the documentation process, they CANNOT SELL YOU A CAR. As such, why should you pay?
I have seen charges applied as much as £150/$250. Do not pay this charge. Also, do not allow the car dealer to use the removal of this charge as a means of negotiation. It’s a made up charge
These charges are different to the Documentation Fees applied to some finance agreements, so don’t confuse the two.
I’ll be sharing my experiences in the motortrade on this blog and more importantly as many hints, tips and tactics to help you LOWER the cost of your motoring and vehicle ownership in my new book 4 Wheels For Less, due for release later this month. I’ll also be sending out tips over Twitter so please don’t hesitate to follow me @4wheelsforless