Answers to your admin fee questions
By Ben Smith, Product lead, Consumer Products, Auto Trader.
We recently gave you an update on our webinar on 3rd March about one part of our plans to bring more transparency to our platform; displaying admin fees on adverts. We’re really pleased to see broad support for the changes we’re looking to implement but we did get a lot of very valid questions about the various nuances or specifics of what we class as an admin fee.
If you missed the original blog post about what our plans are for admin fees, read this first. We have previously given the following definition of what is or isn’t an admin fee, so we’ll start by reiterating that and then go through each question raised on the webinar, plus a few others which have cropped up since. We want to ensure that all customers can correctly identify how they should answer the question “Do I charge admin fees” on Auto Trader.
We have a responsibility to the 10 million monthly visitors who come to Auto Trader to ensure they can compare vehicles equally knowing the total price they would need to pay to purchase that vehicle. We also have a responsibility to retailers that they can compete fairly on our platform.
What is an admin fee?
An admin fee is a compulsory charge that a buyer must pay to complete the transaction with you and purchase the vehicle. As a retailer you have a duty to ensure that the final price payable, including any unavoidable and foreseeable components must be clearly advertised to the potential buyer, including on marketplaces like ours. You should declare that you do charge admin fees if this applies to most or all of your stock.
What isn’t an admin fee?
In short, any optional charges. Anything which is entirely optional for the buyer is not an admin fee. Many retailers offer value-add products or services, at a cost on top of the vehicle price, which can enhance the buying and ownership experience but are not essential to complete the purchase of the vehicle advertised. These are not classed as admin fees and can include:
· Warranty/extended warranty
· GAP insurance
· Paint protection
· Service plan
· Membership schemes with benefits
· Home delivery fee
Responses to your webinar questions
Q. Are there any plans to cover optional fees?
A. If a fee is optional then we’d assume there will be value-add products or customer benefits associated with that fee, then you may select “no admin fees” on your adverts and you are welcome to offer this optional product or service to the customer. In future we may consider displaying your value-add consumer products or offerings on Auto Trader.
Q. What price does Auto Trader see as a fair price for an admin fee
A. We don’t have a view on what is a fair price, that’s a decision you must take. Our aim is to ensure transparency for buyers so that they know the total price of the vehicle, including any compulsory fees when they’re comparing vehicles on Auto Trader.
Q. Do you think customers are put off by admin fees?
A. We are not trying to advise you whether you should charge admin fees or not, this is a business decision you must make. Our aim is to ensure pricing transparency for buyers, so that a buyer knows the total price they must pay to purchase the vehicle.
Q. I don't charge admin fees, but sometimes when I sell a vehicle on finance there is an authorisation or broker fee which isn't anything to do with me. How should I deal with this?
A. We consider a third-party admin fee to be something that is part of the finance agreement and so not an admin fee on the vehicle, so if you don’t charge admin fees on the vehicle, but you do pass on third-party finance fees, you can select that you don’t charge admin fees. In this scenario, you must still make it clear to the buyer that this is an admin fee payable to a 3rd party and include this separately on the sales invoice. You may also choose to not pass on the fee to the buyer and absorb it in the vehicle margin.
Q. What should we do if we only charge an admin fee IF a customer approaches their own or a multi finance provider but not otherwise?
A. If a buyer has organised their own finance (e.g. via their bank or their own broker), and they are buying ‘in cash, we would consider that they should be able to buy that vehicle at the advertised screen price so in this instance any compulsory fees on top of the vehicle price would be classed as an admin fee. If the deal is being done via a broker like Car Finance 247 or Zuto and the broker charges you an introductory fee then you may choose to absorb this or pass it onto the buyer. If passed onto the buyer we would not view this as an admin fee, so long as the buyer has the choice not to pay it (e.g. pay in cash). You can think of this like an APR, an advertised APR should be available to the majority of customers who apply for it; likewise, if you charge a compulsory admin fee to the majority of customers, you should state that you do charge fees.
Q. Would an HPI check be classed as a value-added product along with valeting a car?
A. Any fee which is optional and comes with a value-add service or product such as a HPI check or valet does not count as an admin fee. If the customer has a choice and can decide not to take the additional product or service and therefore not pay the fee, this does not count as an admin fee.
Q. Will admin fees be included in valuations, price indicator and when using tools like Retail Check?
A. Not right now but later this year after admin fees have been added to adverts, the vehicle price + admin fee will be used in our valuations and Price Indicator, so yes at this point when you adjust your price position in Retail Check this will use the “total price”, including any admin fee, to calculate the valuation and price indicator shown.
Q. What should we do if the admin fee is already included in the asking price?
A. If the advertised sale price includes any compulsory fees, such as an admin fee, then you can select “No” and state that you don’t charge admin fees. Alternatively, you could remove the fee from the advertised price, then select “Yes” and the admin fee will appear alongside the lower vehicle price.
Q. Will there be a drop-down menu for consumers to select/show cars that 'exclude' or 'include' admin fees?
A. We don’t currently have plans to allow consumers to filter by retailers or vehicles with or without an admin fee. Our objective will be to ensure that the total vehicle price, including any fees is used to determine how vehicles appear in price searches and what price indicator they receive. A car priced at £10,000 with a £199 compulsory admin fee is still more expensive to purchase than a car priced at £10,099 even if the “vehicle price” excluding the fee is cheaper.
Q. Are home delivery fees classed as an admin fee?
A. If a retailer offers free home delivery, this service is, by definition, included in the advertised price.
If a retailer offers an optional home delivery service at a cost, this is considered a value-add consumer product. If it is a service that has added value beyond the purchase of the car (the convenience), and is something they have to option to not pay (assuming that they are given the option to collect the car and there is no charge associated with this).
If a retailer only offers home delivery and the customer has no option but to pay for delivery, then this must either be included in the advertised price, or if delivery is a separate compulsory fee, you must answer “Yes” to the question “Does my dealership charge admin fees” and state in your advert the cost of delivery.