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What is a dealer financing fee?

I'm going to buy a car at a local dealer. When I looked at the paperwork, I noticed a dealer financing fee for $850. The dealer said that the fee was industry standard. What is a dealer financing fee?

avatar
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
“Dealers have all types of fees that they tack onto vehicles. A dealer financing fee could mean a few different things.
Sometimes it’s a fee that covers their clerical work or a fee for playing the middleman between you and a lender. It also might be part of the APR and financing, only phrased differently so you can see where all of your money is going.
Because of these fees, it’s always advisable to shop around for car loans as you would with
car insurance
. By doing so, you can get the lowest rate, avoid going
upside down on the loan
, and skip some or all of the additional fees.
It’s recommended that you also shop for car insurance before signing on your new car. Lenders will require insurance before you can drive your new car, and they often ask for full coverage, which can be pricey. You can save money by comparing rates.
Jerry
 does all the hard work for you, pulling quotes from the top 50 companies and delivering the best deals to your phone in minutes.”
MORE:
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