Did you know that 86% of Americans are concerned about hidden fees when buying a car? Maybe you're one of those people, and rightfully so. In fact, the average cost of car ownership amounts to $6,684 per year. This includes expenses that you might have overlooked. Want to see if that's true? Here are four hidden car buying costs that you've probably overlooked either before or after purchasing.
Sales Tax
Sales tax is based on a percentage of the price of the vehicle you're trying to buy. Each state sets its own rate that everyone is required to pay when purchasing from a dealership. It's also important to note that not every dealership is going to have the same rate. Sales tax is dependent on both state and local taxes. For example, two dealerships in the same state are likely going to have different rates due to their different cities or counties. The unfortunate truth is that the sticker price isn't the final amount you'll be paying. So if you see the sales tax located on your paperwork, just know that it is not the dealership trying to "get one over on you." It's simply the location.
Insurance Premiums
No one realizes how important car insurance is until they need it. Car insurance keeps both you and your vehicle covered in case of accidents and emergencies, such as theft or vehicle damage.In fact, the dealership is not allowed to put the car up for sale unless that person has car insurance in order to avoid risk. This is also another fee that the dealership does not have control over and is not part of the purchase price. We recommend getting multiple insurance quotes, as this can be the most cost-effective option to get more bang for your buck.
Title and Registration
The title and registration are two separate costs that you'll have to pay for at your local Department of Motor Vehicles (DMV). After signing paperwork, in order to drive your new vehicle off the lot, the dealership will give you a temporary tag that is valid for thirty days. Next, you'll go to your local DMV. There you will pay the title fee to transfer ownership into your name, and a registration fee that registers the vehicle with the state. Paying both of these fees is mandatory.Just make sure to have everything you need in order to streamline the DMV process.
Maintenance and Repairs
Vehicle maintenance and repairs are incredibly important because every vehicle needs them. Buying the car is only the first step to vehicle ownership, but proper maintenance is going to keep your car running as long as possible. You will be responsible for handling expensive repairs and routine maintenance. That said, research on the costs associated with maintaining a vehicle that you're interested in is key. This is especially true if you're looking at purchasing a used car.
While these hidden costs aren't necessarily "dealership secrets," they are still important. But what about other shady tactics?
Check out our other blog that talks about why you should not negotiate based on your monthly payment.
