The Real Cost of Buying a Car

Many people suffer a bit from sticker shock after seeing the final price of a used vehicle. That’s because the price of the car itself isn’t all that you’ll pay when making a purchase from a dealership. There are a bunch of additional fees that you’ll have to pay as well, and they can really add to the overall price of the vehicle when they are all added on in the end. Things like registration, taxes and dealer fees will bump the price up noticeably.

Sales Tax

Any time that you buy a product in the United States, you are expected to pay taxes on that purchase. It’s the same for automobiles as well. The taxes from the purchase of a car could cost you hundreds or thousands on top of the negotiated purchase price, so don’t be too surprised when you see the final amount.

How Trades Affect Sales Tax

In some instances when you trade in a vehicle to help cover the cost of a new one, you’ll receive a tax break on sales tax. In others, you’ll still have to pay the full amount even when you have a trade-in. It’s important to keep this possibility in mind when you have a trade-in though because it could save you money.

Vehicle Registration

Used vehicles have to be registered in your name once purchased from the dealership. Dealerships often handle this task for you, but you still have to pay for it. You’ll pay a set amount to the dealership, and that company will handle the registration process for you so you are good to go when you leave the lot.

Documentation Fees

There’s a lot of paperwork that goes along with an automotive purchase, new or used. The dealership manages all this paperwork, but you’ll have to pay them a documentation fee for handling all the work for you. It saves you time, but it’s an added expense that you will have to pay.

Miscellaneous Dealer Fees

When you buy from a car dealership, you’ll likely pay additional fees on top of the standard fees that come with every vehicle purchase. A dealership will charge fees on the purchase for things like an inspection, detailing, shipping and handling and anything else that the dealer had to cover. These fees can really add to the purchasing price of a vehicle, so it’s important to ask about them before you complete the purchase.

Now that you know what all the different fees mean, it might be a bit easier to figure out why you are paying so much more than the original list price for that vehicle. It costs more money to buy a vehicle than you might realize, and it’s important that you negotiate for the lowest purchase price that you can get, because you’ll be covering all those additional fees as well, adding hundreds or thousands of dollars to your purchase cost.