Administration Fees By Car Dealers
Sometimes I have customers that have no real knowledge about dealing with a car dealer when thinking about purchasing a car.
In a recent example, I did a car inspection for a young lady on a car that she had only seen on the internet. After speaking with the owner she organised a car inspection by me when the seller was home.
Unfortunately, that car required at least $2000 to $2500 dollars in repairs so was not worth buying. The car needed registration, suspension repairs, servicing, 4 tyres, wheel bearings, wiper rubbers, gas struts to name a few and also had been fully resprayed due to having front and rear accident damage.
Even though the seller dropped the price from $5000 down to $3000 the condition of the vehicle was untidy and with the previous accident damage wasn’t worth buying.
Screen out Cars and narrow the list
I suggested that she look at my buying tips and try to screen out cars that might not be suitable before having me do another car inspection. After finding a few cars she emailed me with links them and due to her work commitments, it was hard for her to contact some sellers so I helped her out by checking the cars and also spoke to some sellers on her behalf.
One of the cars she found was from a car dealer advertising on gumtree.
I had a look at the ad and the car seemed reasonable apparently low kms comes with a 12-month warranty “free” but asking price was $4999. No mention about registration, if there were any log books or service history. It also had a “dealer administration fee” of $295 on top of the car price.
I rang the dealer on my customer’s behalf and asked him if the price is negotiable. The dealer said it is a “fixed price” not negotiable comes with no registration but he can put 3, 6 or 12 months on the car at extra cost. I asked about the administration fee. He told me it is to cover paperwork and the time spent selling the car etc.
I reminded him he is a car dealer and your selling price should take into account dealing with the customer and doing the required paperwork. Charging an “administration fee” may work on customers who are obtaining finance as some people are just glad to be able to get a car and don’t worry about the extra charges from car dealers.
Price not what it seems
So the car is advertised at $4999 not negotiable (but comes with a blue slip) plus a $295 administration fee plus 12 months registration approx $1000 plus transfer costs after the purchase of $200. This brings the cost of the car to $6494 dollars.
So the $4999 car is now going to cost almost $6500 and this is before the car inspection cost $250 and the actual car condition is still unknown apart from what the dealer has in their listing.
Maybe the car also needs some other repairs due to wear and tear. Of course, it is a second-hand car that is 15 years old.
The obvious choice was to give this car a miss as the buyers budget was not that high and the car dealer was obviously from another planet. Customers should take into account costs of buying a second-hand car and should be looking for a car that represents good value.
There were a few other cars available but from the photos they weren’t really worth pursuing and some of the areas they are being sold from should usually raise alarm bells more so when the seller’s names are “John” or “Bill”, “Peter” etc, you just know that isn’t their real name.
Another car was found by me and I contacted the dealer who was helpful so I sent the link to the customer and an inspection was arranged for that same day. This car was $3888 had 4 months registration no dealer administration fee and already had a service done by the dealer. It was 5 door hatchback (all one colour) which was more preferable to the 3 door hatchback from the other dealer. The buyer went with this car, it did have a few small wear and tear items some bumps and bruises for the age was tidy overall so was a good buy for the customer and was within her budget.
Compared to the previous inspection this car had been taken care of more so with the servicing side of things so not much to spend, mainly optional items but the tyres were good, good brakes, clean coolant, transmission fluid clean, oil clean etc so better value.
Later that evening I received a phone call from the first dealer (Harvey &Co) with his $4999 car that works out be $6500 asking if I was still interested. I told him the customer found another car which she will be going with that was $1100 cheaper had no administration fees and had registration, it also had an extra 2 doors.
The dealer claimed that the 3 door hatch was rarer (it’s a Toyota Echo) so they cost more, really?. 5 door Echo’s are harder to find than the 3 door and cost more for insurance as well. Not much good when you are trying get a baby in and out of the car.
The dealer got arrogant and told me I was a “goose” just because I queried his “not negotiable fixed price”, administration fees and the no registration status. He then sent me a text message from the dealers listed phone number telling me and I quote from the message “next time you go to macas or kfc tell them you don’t have enough and ask if there negotiable lol” “Clown” (with the emoji of a clown).
Don’t know what his issue is must have been the planet he came from, I did offer to drop in next time I am down that way and maybe I’ll take a red nose with me.
It does pay to shop around and screen out potential cars that you may be interested in buying and phone calls are easier but always try to clarify with sellers especially car dealers.