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Hidden Costs of Buying a Used Car

Hidden Costs of Buying a Used Car

Couple talking to salesman outside of car dealer

You've done your research and determined your budget. You go to the dealership feeling confident, and your salesman offers you a great deal. You celebrate over coffee as you settle into the sales office, ready to sign, and then it hits you. All of a sudden your great deal goes wrong, and you're charged thousands of dollars more than you expected. Where did these hidden costs come from? You can avoid this shock by walking into the dealership knowing which expenses are legitimate and which are questionable.

Unavoidable Costs

There are a few charges on top of the sticker price of the car that you won't be able to avoid. The Dealer Documentation fee, for example, is a legal charge that covers the dealer's document submission fees. It varies by state and can range from $200-$800. Sales tax is another unavoidable cost, but you should be certain that you're not overcharged. Some states determine the sales tax from the total due after your trade-in amount, so check your local laws before you head to the dealer. You'll also have to pay license and title fees that vary by state.

Avoidable Costs

Most dealerships also charge extra fees that are not required by law, so it's important to ask for a detailed invoice of your total. While some of these fees might be legitimate costs, you should be suspicious of any charges added without your knowledge or permission. One fee to fight is a Dealer Preparation Fee, which covers the labor and cost involved in preparing the used car for sale. The manufacturer now pays this fee, so you should not be held accountable. Other non-required fees include services that you can opt out of, like window etching, rust proofing, and various protection plans. If you need any of these services, remember that they are usually cheaper elsewhere, so it's best to refuse.

Other Costs to Consider

Often, buyers will determine their budgets without taking into account costs that occur after purchase. It's important to check with your insurance company to determine the cost of insuring your new vehicle before you buy. You should also be aware of typical repair costs and the characteristic frequency of repair, which can be found on many consumer feedback websites.