Used car admin fees: should I pay them?
Being asked to pay an additional fee can come as a nasty surprise when you’re buying a used car. We reveal which dealers charge admin fees and what they’re for...
If you’re buying a second-hand car, the overall price is likely to be very important to you. So an unexpected extra £495 in the form of an ‘administration fee’ could be the difference between being able to afford the car or not. On a £3000 car, for example, a £495 fee represents an increase of more than 16% in the overall price.
What Car? believes the sticker price you see on a second-hand car should be the final, all-inclusive amount payable. We’re not the only ones who think this; the law is on our side. If a dealer doesn’t display the full price of a car, including any mandatory admin fee, it's contravening the Consumer Protection from Unfair Trading Regulations 2008, because doing so is classed as a ‘misleading action’.
It also goes against the spirit of the Motor Ombudsman’s codes of practice, which most franchised dealers and many independents are signed up to. The Code of Practice for Vehicle Sales states the following on adverts for new and used cars: “Any advertisements will objectively promote vehicle models based upon relevant and verifiable features, including the purchase price. The price quoted for a vehicle should be the ‘on the road’ price for which you can buy the vehicle.”
What our research revealed
While the majority of franchised and independent dealers don’t charge admin fees for used cars, there is a small number that do. Our research revealed five independent used car traders that charge a compulsory fee and four that have an optional fee. When we looked at franchised dealers, seven charged a mandatory admin fee and one had a non-compulsory charge.
The highest fees we found were charged by independent traders for buyers who use a finance broker that’s not on their list of preferred lenders. Cargiant charges £399 on cars bought this way and Imperial Cars’ fee is £495. Of the car supermarkets we looked at, Cargiant and Motor Depot, which also trades as CarSupermarket.com, had the highest standard admin fee of £199, followed by Imperial with a charge of £180.
Although we found more franchised dealer groups charging admin fees, theirs were generally lower; the highest was Perrys at £149, followed by Motorline and Wilsons at £139.
All the car supermarkets and most of the franchised dealer groups we checked clearly displayed the admin fee close to the price of each car for sale. However, Mercedes-Benz dealer Sandown only mentions it on the terms and conditions page of its website. And Ford dealer Hartwell has conflicting information on its website; no admin fee is mentioned next to the price of a car, but a fee of £75 is listed on the warranty page of some car listings.
In contrast, Directcars has a note at the bottom of each car for sale and other companies explain them in their terms and conditions. Directcars told us: “We do not charge a compulsory admin fee. We advertise a Pre-Delivery Package which is offered at point of sale with our other products and is optional.”
Are used car admin fees justified?
While some of the things dealers say the fee covers appear to be relevant extra costs, others are simply things you’d expect a trader to do as a matter of course when they're getting a used car ready to sell. Short-term insurance to cover you to drive the car for the first week is handy and gives you more time to hunt down the best-priced cover, and an aftermarket warranty of three to 12 months on a car that no longer has manufacturer cover will also appeal to many buyers.
However, we’d expect a dealer to do an HPI check on a car, and doing a service or MOT test on a car if it’s due also seems like best practice to make the car more appealing to buyers.
In fact, these things are stipulated in The Motor Ombudsman’s code of practice. It states: “All vehicles will be finance-free, clear of category A, B, S and N write-off, supported by a vehicle provenance check and have a V5C registration certificate (log book).
“All used vehicles will be subject to a pre-sales inspection in accordance with an approved checklist. The checklist must be completed before the vehicle is offered for sale and displayed in a prominent place.”
Although the code doesn’t state that these things should be carried out for free, they are generally perceived by consumers to be part of the service you expect to get when buying from a car dealer, as opposed to a private buyer.
We asked the dealers that charge compulsory admin fees why they do so and, where it isn’t stated on their website, what they are for. None of them provided us with answers.
However, Sue Robinson, director of the National Franchised Dealers Association (NFDA), which represents franchised car retailers in the UK, said: “We are aware that a number of retailers charge administration fees for used cars. These usually cover costs such as a full tank of fuel, new rubber mats, credit card charges from the DVLA for change of ownership, cleaning the car and other incidentals.
"The NFDA advises members to explain these fees to their customers up front before they place the order.”
Another aspect that could cause confusion for consumers is that the majority of the traders we looked at (except Hartwell and Sandown) displayed the same cars for sale on external websites with prices that didn’t include the admin fee.
Again, we asked the dealer groups to comment on this. Car Shop responded: “Due to the optional nature of the admin fee, we are not required to present the cost of this product within the advertised price of the vehicle on either our website, in-store point of sale or third-party websites such as AutoTrader.”
Admin fees: who charges them and what are they for
Independent dealer groups:
Compulsory admin fee of £199 or £399 if finance supplied by unapproved lender. No info on website to say what the fee covers.
Optional admin fee of £149. Info in T&Cs of website state it covers: re-valet, access to IT equipment to buy car tax, HPI check, settling outstanding finance on trade-in, numberplate transfer, sending V5 to DVLA, five-day drive-away insurance, breakdown recovery for three-month/3000-mile warranty period.
Optional admin fee of £59.99. Info at bottom of web page states it covers HPI check, mechanical check including of car for sale lubrication service, valet, new numberplates and 10 litres of fuel.
Compulsory admin fee of £180 or £495 if finance supplied by unapproved lender. Info on website states it covers vehicle provenance check, three-month warranty, cosmetic and mechanical checks.
Compulsory admin fee of £199. Info displayed beside each car price states it covers HPI check, full valet and service and MOT if due.
Compulsory admin fee of £99 Yes. Info displayed beside each car price states it covers HPI check, PDI check, service if due and basic valet.
Optional admin fee of £99. Info displayed beside each car price states it covers HPI check, pre-delivery inspection, valet, new numberplates and service if due in 2000 miles or three months.
Stebbings Car Superstore
Compulsory admin fee of £59. Fee is displayed beside each car price, but there’s no info on what it covers.
The Car People
Optional admin fee of £49.95. Fee is not displayed next to car prices, but website states it covers re-valet, HPI check and settling outstanding finance on trade-in, numberplate transfer and assistance with taxing the new car.
Compulsory admin fee of £49. Fee is displayed beside each car price but there’s no info on what it covers.
Compulsory admin fee of £75. Fee is not displayed next to car prices, only on some warranty pages for cars for sale. It covers HPI check, administering seven-day drive-away insurance, notifying DVLA of change of keeper, for sale assistance with car tax.
Compulsory admin fee of £139. Fee is displayed beside each car price; it covers vehicle documentation set-up.
Optional admin fee of £149. Fee is not displayed next to car prices; it covers HPI checks, manufacturer recall check, software updates, pre-delivery inspection, five to seven-day insurance cover, valet, service if required, 75-point used car check.
Perrys (Vauxhall Preston)
Compulsory admin fee of £149. Fee is displayed beside each car price; no details on website on what it covers.
Compulsory admin fee of £99. Fee is displayed beside each car price; it covers up to seven days’ insurance, vehicle provenance guarantee, HPI check, 10 litres of fuel, full valet, 75-point used car check.
Sandown Motor Group (Mercedes)
Compulsory admin fee of £111.63. Fee is not displayed beside each car price; no details on website on what it covers.
Compulsory admin fee of £139. Fee is displayed beside each car price; no details on website on what it covers.
What Car? says…
Some of the cars offered for sale with extra fees added still work out cheaper than alternatives, so it’s worth comparing overall prices, including any admin fees.
However, it’s important that compulsory admin fees are clearly flagged up or included in the price. Only having this information in the terms and conditions of a website isn’t helpful to buyers, and not showing it on external websites encourages potential buyers to click on cars that appear to be cheaper but might not be not once the fees are applied.
Our research shows just how important it is to shop around and carefully check prices so that you don’t end up hundreds of pounds out of pocket.
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