What on earth is an "advertising fee"? We just got charged by our Toyota dealer.

Dear Car Talk

Dear Car Talk | Aug 01, 2002

Dear Tom and Ray:

After buying a new car (a Toyota Tundra), I feel ripped off. Just when I was feeling good about the deal (we agreed to a price just 5 percent above invoice), the guy added on an "advertising fee" just as we were signing the papers. Four hundred bucks! When I asked what this was, he said "Everybody pays for this." So, feeling like we had no recourse, we dutifully signed the papers. Both my husband and I woke up the next morning thinking about that stupid fee and wondering just what it is?? Does everyone who buys a car pay for this, or are we being penalized because we didn't want any add-ons, like undercoating? -- Pamela

TOM: Well, the fee is legitimate, Pamela. But the way the guy snuck it in at the last minute is kind of slippery, if you ask me. I'd say that earned him his plaid pants and white belt for the week.

RAY: Dealers do pay a fee of about 1 percent of the car's price to cover advertising costs. Some dealers choose to simply fold it into their cost for the car, and with that higher cost in mind, they negotiate a higher price with you. Others separate it out and pass it along as a stand-alone fee. And some dealers will even negotiate the fee.

TOM: But what your salesman did was not nice. He negotiated a price for the truck, and then, at the last possible minute, said, "Oh, by the way, I'm going to charge you another $400."

RAY: If he were a more decent chap, he would have told you up front that you could have the truck for 5 percent over invoice, plus the taxes (legit), the destination charge (also legit), the document fee (also legit) and the advertising fee. He would have told you the dollar amounts of each of those fees, at which point you probably would have said, "What's an advertising fee?"

TOM: He could have explained it to you then, and you wouldn't have felt ambushed right at the end.

RAY: If a salesman tried that on me, Pamela, I would have walked out on the deal. Personally, I resent being surprised at the last minute like that. And I would have hoped that would have sent a message to the salesman that, perhaps, he'd remember in the future. But I understand that without enough information, and having already invested several hours in the transaction, you decided to go ahead with it.

TOM: That's why it's important to ask before you agree on a price if there are any other charges or fees that are not included in that price. Then jot them down and add them up so that when the papers are filled out, there are no surprises.

RAY: So the advertising fee is not a "made-up" fee, Pamela. You didn't get ripped off in the traditional sense. But, in my opinion, he did pull a fast one on you, and I'd remember that the next time you, your friends or your family are deciding which dealer to go to for your next vehicle.

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