Dealer admin fees explained

What is a dealer admin fee?

So, what is a dealer admin fee? Dealer admin fees are compulsory charges that are added to a vehicle’s advertised purchase price. They are usually to cover the costs of processing the paperwork of a car purchase.

While the majority of retailers don’t charge an administrative fee when buying a car, many still do. For that reason, we encourage you to have all the information and a breakdown of all fees before committing to a purchase.

Dealer admin fees are also referred to as ‘processing fees’ or ‘documentation fees’. These fees can be as much as £500 or more.

What does the law say about admin fees?

The law indicates that dealers must always display the full and final price of a car, including any mandatory admin fees. If they don’t, it’s classed as ‘misleading action’ and they are contravening the Consumer Protection from Unfair Trading Regulations 2008.

Many dealers are also signed up to the Motor Ombudsman’s codes of practice, the UK’s government-backed, self-regulated body for the motor industry. In ‘The Motor Industry Code of Practice for Vehicle Sales’ document by the Motor Ombudsman, it states that ‘Any advertisements, promotions or any other publications or communications will not contain any content, which is likely to mislead you or be misunderstood.’

It also states that ‘the price quoted for a vehicle should be the ‘on the road’ price for which you can buy the vehicle’. Naturally, when a retailer applies hidden dealer admin fees on top of the advertised car purchase price, they go completely against the spirit of the document.

However, the vast majority of retailers are completely transparent about these fees with many providing customers with the choice to opt-out. Some fees also include helpful benefits like short-term car insurance and car tax sales assistance.

Should you pay dealer admin fees?

While dealer admin fees are frustrating, additional fees when buying a car can be justified. It’s therefore important to know what to expect from a trader as standard, and what to expect to have to pay more for. Even then, you should have a choice to opt out if you wish.

Things like free or cheap HPI checks should be standard, as should MOT tests and services if they’re due. After all, the Motor Ombudsman’s code of practice states that “All used vehicles will be subject to a pre-sales inspection in accordance with an approved checklist. The checklist must be completed before the vehicle is offered for sale and displayed in a prominent place.”

Meanwhile, short-term insurance is handy if you’re looking to drive the car away from the dealership garage immediately after purchase. That said, you’ll likely get a better deal by arranging your own car insurance in advance. If the car you’re buying is no longer covered by the manufacturer, you might also find aftermarket warranties useful.

And in terms of indemnity insurance, it’s optional. That said, you shouldn’t expect to get indemnity free. Cars can be insured for indemnity at an additional cost, but it should not be a mandatory charge at the point of purchase.

Remember that a good car dealer will always be transparent about any additional admin fees.

And don’t forget – fees are often negotiable. If you question the dealer about their charges and put them under pressure, you may find that they’re happy to waive the fee. Especially if they think they might otherwise lose a sale.

Now that you know all about dealer admin fees, you’ll be in a much more informed position when buying a second-hand car. And for more information, check out our Advice Guides. They contain everything you need to know.