Buying A New Car? Look Out For These Additional Costs

What is the total cost of owning a car? It's not just the sticker price that you’ll be paying for. Usually, there are multiple additional expenses that you must take into account. Otherwise, you’ll be surprised when you receive the final invoice.

To help you determine that you’re paying the right amount, read on to learn the eight hidden costs you may face when you buy a new vehicle. 

Financing Charges 

Purchasing a car with the help of financing comes with additional charges. Financing charges are the actual charges added while taking an auto loan, usually based on the rate of interest.

The interest rate is determined based on the vehicle type, terms, and credit score.

Hence, to save on these charges, consider various lenders and a good down payment amount to get an affordable interest rate. 

Sales Taxes 

Whether you’re thinking of buying a new vehicle or a used one, sales tax will be levied on either. The taxable amount varies according to the location you’re living in. Every state comes with a different sales tax form that ranges from two to eight percent. 

Contact a tax authority or your dealer to calculate the sales tax you’ll be liable to pay and plan accordingly. Even if your state doesn’t charge you this tax, the dealership may still charge a special tax rate for the car. 

Title And Registration Fees 

To legally use your car, you’ll need to get it registered in your name. To do so, you’ll need to pay for the registration, title fees, and license plates. Similar to sales taxes, registration and title fees vary by state.

Get in touch with the Motor Vehicles Department of your state to learn about the fees your area charges for registering. The registration and title fees usually range from $35 to $101 and $3 to $95, respectively. 

Fees Charged By The Dealership 

Many dealers charge the buyers a documentation fee that’s collected for the processing of the paperwork. Some dealers also charge the buyers for preparation expenses. These expenses may include washing the vehicle, checking its oil, and advertisement fees. 

Delivery charges are also added if the car is to be delivered to your doorstep from the manufacturer. The dealership fees are negotiable. Hence, make sure you discuss them before finalizing the deal. 

Insurance Costs 

Although getting car insurance is mandatory in most states, it’s still advisable to look for an ideal option that fits your needs and budget. In case of any accident, you might have to empty your pockets to cover the various expenses.

Insurance would help in keeping your savings safe in such a situation. Compare the packages available on the market and select an ideal budget-friendly one for your vehicle.

Maintenance Costs 

Ready with the model you’re investing in? Make sure you’ve calculated the average maintenance costs for the car. A brand-new model would demand maintenance expenses like tire rotations and oil changes.

Alternatively, if you’re investing in a used model, you might have additional expenses like battery replacement charges, new tires, windshield replacement charges, and so forth. 

Moreover, the area and environment you live in can add to the maintenance charges for your car. Therefore, work out every possible expense to determine how much the upkeep of the vehicle will cost. Make sure to do this before you proceed with the paperwork.

Cost Of Fuel 

Diesel or gas? Yes, the fuel cost is also essential when calculating the additional expenses. The total fuel cost you pay depends on the miles per gallon along with the fuel prices and condition of the roads in your area. If you’re driving a car regularly for work or going on frequent trips, look to purchase a vehicle that has good ratings for fuel economy. The expense of fuel can add up very quickly. 

Add-Ons 

Add-on costs (AOC) covers other miscellaneous charges at the time of purchasing the car. These include accessory costs, handling charges, depreciation, and other model modification charges for the vehicle. These add-ons are negotiable. 

Moreover, it’s always a good idea to get any extra features you may want elsewhere since you may end up paying more at the dealership. Hence, check on the prices of the accessories with local retailers before getting it included from the dealership.

Bottom Line 

A vehicle is one of the more important assets you’ll own. Therefore, taking sufficient time for selecting the model and getting familiar with the hidden expenses will help in preparing an ideal budget for the car.