As Jalopnik’s resident car-buying expert and a professional car shopper, I get emails. Lots of emails. I’ve picked a few of your questions and will try to help out. This week we are talking about an increase in bogus dealer fees and how to manage the end of a lease when the automaker doesn’t allow for a third-party buyout.
I settled on buying a CPO 2020 TLX SH-AWD (low mileage, any color). I am in Houston and there is not much inventory here so I expanded my search to include other cities in Texas. I came across a great example at Hiley Acura in Ft. Worth. I offered to buy the car but before we could get to the finance part, the salesman sent me an invoice so I could see the “out the door” price. I was shocked to see a $1500 dealer prep fee. When I complained, the salesman told me that the other Acura dealer charged twice as much! I have never seen a fee like that...is that common? Am I being unreasonable or is that a scam? The salesman said the fee was for dents and dings, curb rash, etc. but the car only has 7k miles and is a dealer demo. He also said they charge this fee to everyone but for a car to be CPO, it can’t have excessive damage (or so I thought). I really need a car and have had no luck so I really don’t know what to do. IT seems like this is more and more common because the dealers know they can get away with it.
When you buy a car there are certain fees that you should expect to pay and ones that are just padding for extra profit. Now inventory is tight and dealers are moving inventory quickly, some of these stores are really leaning into these extra fees. Often this is a way to “game” the online pricing system where they advertise a car at a market-appropriate price only to add in a bunch of nonsense later. Of course, there are a number of car buying tips online and almost every one of them will tell you to refuse to pay the fees. While this advice sounds great it’s incredibly unhelpful, because in almost every instance the dealer will just refuse to remove it and bank on selling the same car with the same overpriced fees to some other customer.
Should you attempt to push back on these fees? Sure, but don’t expect much movement. What you should focus on is the total out-the-door price of the vehicle. Perhaps there is a similar car with a slightly higher asking price but no fees from that dealer. It’s also possible that the local deal with the bonkers fees is the best you are going to get. Of course, the big risk in trying to shop elsewhere is while you wait for better bids to come in, the offer you had is now gone. Right now, buyers want to forget about finding a “good” deal, and try to find something that is “good enough.”
Next up, how can I cash out equity in my lease if the automaker doesn’t allow for third-party buyouts?
“A few weeks ago you mentioned in one of your articles that consumers might find it advantageous to have some of the online car shops (Carvana, Vroom, etc) to give a quote on a leased vehicle. With used car prices going crazy, it’s likely the offer would be a fair bit higher than the lease buyout / stated residual value.
I took your advice over the weekend, and was pleasantly surprised to find that Carvana was willing to offer me about $4K more than the stated buyout for my ’18 Rogue that is at the end of its lease term. I submitted some verification photos (odometer photo, etc), and got an email back stating they could not proceed with the purchase due to Nissan’s policy of not allowing this. Seems like Nissan (and I’m sure many others) have started cracking down on other dealerships/entities purchasing their vehicles off lease – they’re desperate for used inventory just like everyone else right now.
So, my question is…is there any way around this, other than buying the car myself and then turning around and selling it back to Carvana? I’m a little hesitant to buy it, as I don’t want to be stuck with this car if the market suddenly changes. Plus I don’t want to pay any additional sales tax and deal with title transfer, etc. “
Some automakers will not allow for a third-party lease buyout. What this means is that the car must be turned in through the brand’s dealer network and other dealers like Carvana or Vroom would not be permitted to conduct this transaction. You can, however, buy it out on your own then resell it to the online dealers but you will likely have to pay sales tax and DMV fees which may negate any equity offered by them.
Got a car buying conundrum that you need some assistance with? Email me at firstname.lastname@example.org!