What is dealer prep?
A dealer preparation, also known as dealer prep, refers to an extra charge that dealers impose on customers after the manufacturers have paid them for preparing the car for sale.
Dealers say the additional charge covers services such as cleaning and road testing the car, adding fluids, setting up the antenna, installing fuses, fixing the license plate holder and removing plastic seat covers. These services, which usually take less than two hours, are included in the manufacturer’s suggested retail price (MSRP) or are compensated by the manufacturer. Dealer prep, therefore, is the dealers’ way of making extra profits, and the charge is usually printed permanently on order forms, which leads customers to think it’s mandatory.
Some customers refuse to pay that extra cost, while others pay it. In any case, the dealer prep is not illegal. Most dealers will remove the extra charge if a savvy customer balks at paying it. If the salesperson refuses to remove dealer prep, the client can decide to pay it or walk away.
Dealer prep example
A manufacturer has suggested the price of a car at $25,000. This includes the charges for preparing the car for sale. After receiving the car, the salesperson adds another sticker next to the original one showing $400 for car preparation services, including vacuuming, road testing and removing the plastic covering. This extra amount is known as dealer preparation or dealer prep.
Read Bankrate’s advice on how to avoid unnecessary fees when buying a car.