A car’s ticket price can only tell you so much. There are hidden car purchase costs that make a HUGE impact on how much you have to pay. Here are eight of the biggest ones you should know.
1. Fuel
Okay, this might sound obvious, but it’s easy to forget how quickly gas can add up (learn how to save money on gas).
Most Americans spend $2,000 on gasoline annually. Ouch! If your car has poor fuel efficiency, that cost can grow exponentially. This is a great perk of driving a small car.
2. Sales Tax
The ticket price doesn’t include your city’s sales tax. My psychic powers aren’t working, so I’m not sure what the tax rate might be in your town. I’ll let you do the math for this one. My prediction? A big number with lots of zeroes. 🙁
3. Loan Interest
If you buy a $15,000 vehicle with a 3% interest rate and $300 minimum monthly payment, you will end up paying an additional $1,044 to finance that loan. This is why I recommend paying cash when possible. I know that might require some serious budgeting, but it will save money in the long-run!
4. Auto Insurance
Some cars are more expensive to insure than others. Insurance rates are influenced by a vehicle’s safety ratings and likelihood of being stolen. This is bad news for owners of the Honda Accord and Ford F-150. Here’s a helpful guide to estimating car insurance before you buy a car.
5. Extended Warranty
Let’s keep this simple. Never buy an extended warranty on the spot. You’ll get a better deal after you shop around. If you’re not going to keep the car for more than three years, then you might not need an extended warranty at all. Don’t let the finance person talk you into an emotional decision. Commit to nothing more than, “I’ll think about it.”
6. Repair and Maintenance
Oil changes are a drop in the bucket of routine maintenance costs. Good tires run about $100 each. You’ll need to replace them every 50,000 miles. Your brakes need to be checked every year, which will probably cost about $200-300. Sound expensive? That’s nothing. You should see how much negligence costs.
7. Registration and Title Fees
No one likes to pay Uncle Sam, but these are small potatoes compared to some of the other costs described here. This cost depends on your location. If you’re curious, here’s a list of registration and title fees by state.
8. Dealer and Manufacturer Fees
If you can imagine it, car dealers have a fee for it.
There’s a floor plan fee that covers the cost of holding cars in a showroom.
There’s a vehicle preparation fee that covers the cost of cleaning a car before you drive it off the lot.
You don’t pay Old Navy extra money for stocking your t-shirt and throwing it in a bag, do you? No! Some fees are legitimate, but some are baloney. Press the dealer for details. Refuse to pay anything that doesn’t pass the sniff test.
That’s a lot to digest, huh? Being aware of these secret car purchase costs will help you make a smart buying decision. To learn more about the process of buying a car, check out the blogs below.
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