car price jacking

I just purchased a vehicle. The list price on the dealer web site was $10,982.00. However the dealer quoted a lower price around $8,000. However when I signed the loan papers the cost of the car is listed as $12,817.00. When I questioned the increase in the cost of the car, the dealer stated that the additional cost was bank processing fees, because I had very bad credit and was hard to finance. The problem with this is that I never heard of the bank adding up-front processing fess, as well there is no break down of what the additional fees are or represent. The dealer first tried to say that the $12K was the price of the car, when I advised him of our conversation and that the price he quoted was less than the web site list price; than he stated that the bank added processing fess. This does not sound legal to me. Please advise. Also they are now advising that the bank will not finance if I do not increase the deductible on the car insurance policy. This is also legal.