The Hidden Costs of Buying a Car

Buying a car, whether it’s used or new, is an exciting time. It’s always exciting to buy a car because regardless of what anyone says, cars are not just a means of transportation. Sometimes they’re a means of self-expression too. However, you don’t want your individualism to break the bank. Watch out for these hidden costs of buying a car when you start shopping.

Financing Charges

While not really a secret, if you do finance a vehicle, you’ll be paying most of the interest upfront. Car loans are “front-loaded,” which means your first couple of years of making payments is going mostly to the interest tacked on to the loan. Besides “interest” there are often other charges for financing such as loan origination fees and so forth.

Sales Taxes

No matter where you buy a car in the USA, you’ll be paying taxes. It’s either going to happen in your home state or where you buy the car. Often you cannot choose even if you want to. You’ll need to check the rules and regulations for your area.


Title and Registration Fees

Every state requires that you register your vehicle and get a tag that proves you registered it. The cost for this varies widely from state to state. Registration is typically based on the amount you paid for the car, while the tags are a standard cost based on the type of tag you get.

Dealership Fees

Most dealerships like to tack on various dealer fees, from shipping to docking fees. They all like to call it something else. Many times, this fee can be negotiated away but is often the same amount the salesperson will make for selling your car, while the dealership might get other money from the sale too.

Car Insurance

How much car insurance costs depends on the type of car you buy, the price you paid, the price the insurance company believes it’s worth, and other factors. Calling your insurance company to get a bid before you get a final price can be very helpful when you are negotiating, as the insurance company can give you more info about what the car is worth.

Maintenance Costs

You cannot really know for certain how much it’s going to cost to keep a vehicle in tip-top shape. For most people, this is not a factor they ever consider. However, if you do your research on the make and model of the car before buying it, you can go in with your eyes wide open in terms of this cost.

Fuel Costs

While also not hidden since it’s listed with the vehicle how much it should get in terms of gas mileage, it’s also something most buyers fail to consider. You cannot know future costs for sure since fuel prices fluctuate so much.

Initial Technology Costs

If you buy an electric car, for example, you may need to have a charging station installed in your garage. That can be pricy if it’s not included in your purchase price and if there are no more tax credits. Plus, there can be monthly charges for some features you may like, such as OnStar and other technology you may want to use.

One way to combat some of these fees is to ask your dealer for the price “out the door,” which means tags, registration, dealership fees, and some of these hidden costs can be included upfront. However, the main thing is to be aware of all the costs associated with buying and maintaining your car purchase.

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