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Dealer Prep, also called Make Ready Fee, is a charge for the dealer preparing the car for sale. Usually, the new vehicle is held in a holding yard by the manufacturer until it is sent to a dealer, so it can be filthy. It is a fair service until the fee becomes excessive, which happens a lot.

Many charge a percentage of the factory invoice for dealer prep fees

A 2019 Nissan Motor Co. Rogue sport utility vehicle (SUV) sits on the lot at a car dealership in Joliet, Illinois
Row of Nissan Rogue crossovers | Daniel Acker/Bloomberg via Getty Images

Some dealers charge the same fee for all of the vehicles they sell. But many are now charging a percentage of the factory invoice price. Charges can range from a few hundred dollars to several thousand dollars. 

There is more to the service than just washing the car. There is protective plastic coating or sheeting on parts of the exterior. The same goes for the carpet and seats. 

The manufacturer already pays the dealer to prep vehicles for sale

A lineup of Toyota Tundra full-size pickup trucks at a dealership
Toyota Tundra full-size trucks at a Toyota of Orlando car dealership. | Matt Stroshane/Bloomberg News

Manufacturers have a set of tasks it feels necessary to make the vehicle ready for sale. So to make sure the dealer does these steps the manufacturer pays the dealer to perform them. In almost all cases the manufacturer covers the dealer for their time prepping the vehicle. 

Fluids are checked, fuses are installed at this time, and the vehicle is driven a mile or three to check it out. Dealer license plate holders and radio antennas also are attached. Then the whole vehicle is washed and vacuumed. 

Most good prep departments can wrap up vehicle prep in an hour

Ford Explorer SUVs on display at a dealership
A row of Ford SUVs at a dealership | Daniel Acker/Bloomberg via Getty Images

Dealer prep can take anywhere from an hour to three, but most good prep departments can wrap it up in an hour. So even factoring in $150 an hour should result in a fee that comes in under $500. But some dealers are getting greedy about the Dealer Prep fees. 

Take the time to scan the manufacturer’s sticker affixed to the vehicle window. Toward the bottom of the sticker, there should be a statement covering what the manufacturer represents has been done to prep your new car. It will say something like this: “Manufacturer’s Suggested Retail Price Includes Manufacturer’s Recommended Pre-Delivery Service. Does not include dealer-installed options and accessories, local taxes or license fees.”

Dealers can add any charges and fees it wants. These extra fees hide the true cost of the vehicle because they are never factored into the advertised or quoted price. So, is the fee negotiable? 

You shouldn’t be focused on individual fees

A salesman shows potential customer details of a Maybach 57 limousine | Photo by Sean Gallup/Getty Images

Yes, the fee is negotiable, but you shouldn’t be focused on individual fees. What you are looking for is what the bottom line is that you pay for or finance. After all, that is what all of the charges and fees come down to; the bottom line. 

Otherwise, you’ll be negotiating for every fee charged; and there can be a few of them. There can be Marketing Adjustments, Documentation Fees, and other assorted oblique charges that dealers have a difficult time explaining. So add up the fees and then determine what those plus the actual cost of the vehicle come to. 

Then, mentally start eliminating the excessive fees from the bottom line. Dealers can score hundreds of thousands of dollars if all these fees are factored into their yearly profit. Removing them from your bottom line won’t affect the dealer’s huge windfall from most all other buyers. 


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