Watch Out for Other Types of Consumer Fees

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Watch Out for Other Types of Consumer Fees

Besides bank, credit card and debit card fees, there are a number of other types of consumer fees that you could run into. These include fees attached to the sale or lease of a car, interest and fees when you rent to own electronics and furniture and fees involved in payday or short-term lending. Just like other fees, these fees have the potential to be expensive and can be wasteful, so by being aware of them you can do your best to avoid them or negotiate around them so they aren’t as expensive as they could be.

Car Purchase and Lease Fees

There are many fees that you may be charged when you buy a car. Some may be legitimate fees that a car dealer is charged by the manufacturer, while others may be added on where the dealer hopes to make additional profit. These fees include:

• Vehicle or dealer preparation fees: charges to get the car ready to deliver, including washing the car and removing bumper protectors and other items.
• Documentation fee: a fee that covers the cost to process all the paperwork involved in registering the car with the state and getting a license plate. Check this fee to see how much the state charges and make sure the dealer isn’t adding anything on.
• Floor plan fee: a fee the dealer is charged for keeping the car in their inventory.
• Administrative fees: fees that may be charged to the dealer by the manufacturer or added on.

Everything but the documentation fees are optional, so feel free to negotiate them or even to refuse to pay them as part of the negotiation process.

Fees involved in leasing a car include:

• Security deposit: If you don’t have good credit, the bank or leasing company may require a security deposit that you will get back at the end of the lease after any mileage or damage fees are taken out of it.
• Bank fee: This is an administrative fee charged by the bank or leasing company that is designed to cover the costs involved in getting the lease approved. This can range from $495 to $1,000. Sometimes dealers add to this fee, so it could be negotiated.
• Disposition fee: A fee due at the end of the lease that covers the leasing company’s expenses involved in selling the car once you turn it in. Not all leasing companies charge this fee.
• Documentation, title and licensing fees: These are similar to the documentation fees charged when you buy a car; they cover the costs to license and register your leased car.

Rent-to-Own and Payday Loan Fees

Rent-to-own stores are popular with consumers who have no credit or low credit scores or who don’t have the savings or income to buy items like furniture or electronics outright. In a rent-to-own situation, you sign a contract and make regular payments on an item. You can keep the item for a short period of time and return it or make payments over a long period of time until you own the item.

In the vast majority of cases, you will pay far more for any item in a rent-to-own scenario than you would by saving up and buying the item outright or even putting it on your credit card. And if you get behind on a rent-to-own contract, the company can repossess your item and you will have to pay a fee to have the contract reinstated.

A Consumer Reports report noted that if you bought a laptop through a rent-to-own store and made regular payments over four years, the interest rate on that payment would be 311%, and you would pay $1,260 more for the laptop than if you had bought it outright.

Payday loans are a type of predatory lending. Predatory lending describes loans with very high interest or fees that cost much more than the benefit received from the actual loan.

Loans from payday lenders are designed to cover emergencies, but many consumers who are low-income use them to meet their regular expenses. Fees can be as high as $15 per $100 borrowed, which adds up to a 391% annual percentage interest rate. If you can’t pay the original payday loan back and have to renew it, the costs continue to add up.

Payroll Card Fees

If you receive your wages via a "payroll card"—a debit card that is loaded up with your wages—instead of a traditional check or direct deposit, you should be aware that there may be fees involved for accessing your money. There may be fees to get your balance, for calling customer service, and/or for actually using the card.