Addendum Pricing on New & Used Cars
The vehicle addendum sticker may also be called the "Dealer Add-on Sticker". In this section of AutoCheatSheet.com we'll teach you how to recognize and avoid addendum pricing and this very common car dealer scam.
The addendum sticker is an additional sticker created by the dealer that coordinates with the M.S.R.P. sticker. It's normally placed right beside the window sticker to look as if it's part of the manufacturer's sticker.
On closer inspection, you may notice the price is a lot higher than what's on the M.S.R.P. sticker. This is because a dealer can add high profit dealer added options, market adjustments, or just about anything they want to add to the sticker. Many of these charges can be extremely bloated and you should carefully investigate each charge on the sticker.
All About the Vehicle Addendum Sticker Scam:
What is a Vehicle Addendum Sticker?
The Addendum or dealer add-on sticker is a conveniently placed sticker by the large M.S.R.P. sticker that has all the options and pricing of the vehicle from the manufacturer.
Some car dealers get very creative with their addendum stickers and make them look official and identical in format to the manufacturer stickers.
Never start your negotiations from the Addendum Sticker or M.S.R.P of a vehicle!
The addendum sticker is added to the vehicle by the dealership as soon as the vehicle arrives from the factory and has any added options or prep fees they may have added to the car.
Addendum stickers may include such dealer add-ons as: fabric protection, undercoating, dealer fees, pin stripe, nitrogen, sunroofs, spoilers, market adjustments, extended warranty protection plans, and/or additional accessories such as alarms or music systems etc.
These stickers get added to the vehicles as soon as they hit the lot. Some of the items included on an addendum sticker may or may not have been added to the vehicle.
There are many times a sticker may get on a car before the work has been done. If a vehicle has an addendum sticker and claims it has wheel locks and pinstripes, make sure the car actually has the items listed.
How the Addendum Sticker Scam Works
There are several ways a car dealer and its salespeople will use the addendum sticker to their advantage. Here are a few ways dealers make money with the addendum sticker scam:
Outrageous mark-up on dealer added options - A spoiler added to a car will cost the dealer around $250 parts and labor. The dealer will then list the spoiler on the addendum sticker for $800-$1,250. Pin striping is another big one. Dealer's may have their vehicles pinstriped at a cost of about $15 per car and then charge up to $175 or more to the customer.
The largest mark-ups come with conversion packages, chrome or alloy wheels and tires, truck lift kits, sunroofs and gold packages carry very high profit margins for a car dealership.
Make sure if there's a dealer added option listed on the addendum sticker it's actually on the vehicle. There's many times an addendum sticker will get put on the car before the actual accessory has been installed on the vehicle. The dealer will have no problem "accidentally" charging you for something that's not there.
What's on an Addendum Sticker
Fabric Protection, rust proofing and under coating - Dealers may charge anywhere from $400 to $1,500 for protection packages that are already completed by the factory and come standard with the car.
Extended Warranties and pre-paid maintenance packages - These types of items are considered backend products and are optional. Some dealers will still try and include them within the price of the car. They should not be included in the price and should be your choice to buy them or not.
Market adjustments and additional dealer mark up fees - These are bogus fees. A market adjustment is just an added fee normally because of the popularity and demand of a certain vehicle.. These types of fees are usually associated with new cars arriving on the market.
I remember when the Chrysler P.T. Cruiser first came out years ago. You would see dealer added market adjustments as high as $8,000 over sticker. There was no way to get a dealer to budge on the price and the sad thing was car buyers eagerly paid the premium price. It just goes to show you, if someone wants a certain vehicle they have no problem overpaying for it.
AutoCheatSheet.com's advice is to let the "new" wear off before paying a premium price for any new car.
Never Negotiate from the Addendum Sticker or MSRP Price
Be careful with this very effective little trick when looking at cars on the lot with a car salesman. Casually asking a car salesman what the price of a new car may cost you plenty.
If you ask a slick car salesman the price of a car. He'll walk you around to the M.S.R.P. Sticker of the vehicle, point to the addendum sticker price, and quote that amount to you.
Never Start Negotiating From the Retail Price!
After quoting the higher price to you, a skilled car salesman will quickly ask you another question to change the topic of the conversation. This misdirection keeps you from dwelling on the price of the car.
By quoting you a higher price up front he's increasing his chances of making more profit on the car deal and getting your thinking up about the price. Then by changing the subject makes you forget about the price of the car until later during the negotiation process.
How to Avoid the Addendum Sticker Scam
- Don't ever take a car salesman's word when he states you the price of a new car. Take the time to walk around and inspect the M.S.R.P. and addendum sticker yourself.
- The addendum sticker scam can be avoiding by shopping for the best new car prices online. Addendum stickers do not always include dealer added options. Sometimes a dealer will mark up the price of a vehicle just because it's "popular" or in "high demand."
- Competition will always get you the best price. Get free no-obligation new car price quotes from local dealerships in your area. The sites we recommend are CarClearanceDeals and CarsDirect. Reviewing these quotes will tell you which vehicles dealer's are willing to negotiate and most importantly, which dealer is willing to give you the biggest discount to sell a car.
- Never start your negotiations from the addendum sticker price or MSRP, always figure your own fair profit offer before contacting a dealer. To learn how to do this, read my chapter on how to calculate a fair profit offer on any new car.
- Before you can figure a fair profit new car offer, you need to know how much a dealer paid for the car. Visit my section on how to figure a car dealer's true new car cost to read more.
- If there are any dealer added options on the addendum sticker you don't want. Tell the dealer have them removed along with the added cost.
- Some options may not be able to be removed or you may want them. If that's the case tell them you will pay their cost for the options you would like to remain on the vehicle. These items will be listed at cost + a parts department mark-up. They will be hand written on the invoice, or in the vehicles folder in the form of a repair order. Make sure you see the dealer added options cost in writing.
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Recommended Sites for Online New Car Shopping
CarClearanceDeals and CarsDirect are the quickest way to compare new car prices in your local area. These online sites will provide you with free, no-obligation price quotes and the discounts you receive will give you confidence on your next new car purchase. Walk away from the dealership knowing you received a good deal, not hoping you did.