Hidden fees can inflate the price of a used car

Before her first semester of college, I took my daughter shopping for her first car. She had her heart set on a used Subaru Crosstrek, and we spent hours researching which models performed best and which to avoid.

We found reputable car dealers and built relationships with salespeople, but every time a Crosstrek became available, it sold before we could get there for a test drive.

Then one showed up. CarGurus, an online marketplace for new and used cars, advertised a Crosstrek that fit everything we wanted, including the price. The only catch was the dealer’s poor reputation. It went against everything I advise. But we went anyway, took a test drive, and asked all the standard questions about the car’s history, maintenance, and inspection. My daughter was excited. Too excited to negotiate.

Then, the sale took a turn. When I saw the final price, I realized the dealer had tacked on undisclosed fees, including $699 for a paint-and-interior protection product already installed on the car. It wasn’t included in the advertised price, and we didn’t ask for it. But the dealer wouldn’t budge, even after I told him this practice violated FTC guidance and state law.

With my daughter leaving for college in a few days and a whole summer invested, we signed. I felt ripped off, and I’m not alone. In BBB’s Automotive Customer Report, 63% of car shoppers said surprise charges are one of the fastest ways a dealer loses their trust.

I ultimately wrote to the Attorney General’s Office about the deceptive pricing, and through the AG’s resolution process, the dealer eventually sent me a check for $699. But by then, I was already invested in understanding why issues like the one I experienced are so common in the industry. So, I asked my investigations team to look into the most-complained-about car dealers in our area, and I interviewed used car dealerships to learn what was driving these issues.

The dealers described a strained market. New cars are unaffordable for many people, so demand for quality used cars is high and supply is short. People are driving cars longer, more lower-quality vehicles are going to auction, pre-inspections are limited, and not every dealer stands behind an as-is sale.

When I interviewed car buyers, they described the fallout. Sales and financing terms are hard to understand and come with undisclosed add-ons or fees. Cars break down or show defects soon after the sale. Low-rated dealers won’t make repairs, warranties are limited and often don’t cover the problem, and communication disappears.

So how do you protect yourself if you’re shopping for a quality used car? My top three recommendations:

1. Get pre-approved financing before you go, so you know your options.

2. The advertised price is the price you should pay. Watch for undisclosed fees and add-ons.

3. Get an independent inspection and ask to see the dealer’s inspection notes along with the vehicle history. BBB’s Car Dealer HQ has resources for both consumers and dealers.

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Dené Joubert is senior investigations manager for BBB Great West + Pacific.