FTC CrackDown on Dealer 'Junk Fees' Could Save You $2,500 on Your Next Auto Loan
Buying a car is more expensive than ever in 2026, with the average price topping $50,000. When dealers try to sneak in additional fees, the price of your car could go even higher, costing you perhaps thousands of dollars more.
And if you think that never happens anymore, you’d be wrong. The Federal Trade Commission recently warned 97 auto dealership groups about not disclosing the full price that consumers are required to pay.
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The real risk is if you get charged $2,500 for a non-mandatory “prep” or “inspection” fee and roll it into your loan. In that scenario, you’ll get charged interest for years on top of the actual fee.
Why a $2,500 Fee Costs More Than $2,500
If you’re buying a new car for $50,000, an additional $2,500 “dealer fee” might not seem like a big deal. But that’s exactly what car dealers want you to think.
As of May 2026, the average interest rate for a 60-month new-car loan was about 7.47%. If you roll a $2,500 fee into a 60-month loan at roughly that rate, you’ll pay about $50 more per month.
That may not sound like much, but it adds up to roughly $503 in interest over the life of the loan. In other words, a $2,500 fee becomes a $3,000 expense.
If your interest rate is above the national average, the cost climbs even higher.
At a 10% interest rate, for example, the monthly payment increase would exceed $53, bringing the total cost of that $2,500 fee to about $3,187. That means paying roughly $687 in interest on top of the fee itself.
Dealers know that if they frame the added cost as a small increase to your monthly payment, consumers are more likely to agree to it. But that “small” amount could add 10% or more to the total cost of your vehicle.
What the FTC Wants Dealers To Disclose
In March 2026, the Federal Trade Commission warned dealerships that advertised prices must include the total price consumers are required to pay, excluding only government-imposed charges.
Specifically, the agency said dealers should ensure advertised prices match the prices consumers actually pay.
The FTC’s guidance makes clear that dealers cannot advertise optional products as mandatory and that such products must be disclosed before customers reach the finance office.
You should expect to pay certain legally required fees as part of a vehicle purchase, such as sales taxes, title fees, and registration costs. However, if other fees are truly mandatory, they should be included in the price the dealer initially presents.
If a fee is optional, you should be able to decline it without pressure from the dealership.
What To Do Before You Finance a Car
To help avoid surprises at the dealership, consider these steps:
Get preapproved through a bank, credit union or online lender. This gives you a benchmark interest rate and provides leverage when negotiating financing with a dealer.
Ask for an out-the-door price in writing before visiting the dealership. While this was once difficult to obtain, many dealers now provide it because of online competition. Make sure the quote includes the vehicle price, dealer fees, taxes, title and registration costs. Ask which fees are mandatory and which can be removed.
Review the total amount you’ll pay, not just the monthly payment. Many buyers focus on the monthly cost and overlook the total price of the loan. Dealers know this and may use it to their advantage. If you see unfamiliar fees on the contract, ask for an explanation. If the dealer offers extras, such as protection packages or service contracts, make sure they meet your needs before agreeing to purchase them.
Remember, a $2,500 junk fee may not seem significant compared with the overall cost of a new vehicle. But if you finance that fee, it can add hundreds of dollars to the total amount you pay over the life of the loan.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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