5 Extra Costs of Buying a Car:
How much will your next car cost? It’s a question that many of us have when looking for a new or used car. You may be surprised, but the numbers on the sales sticker are only one of many costs to consider.
Before you visit the dealership, you should know each of these extra costs. I’ll show you five of the biggest extra costs of buying a car along with some tips for reducing them. So let’s take a closer look.
1) Taxes and fees
I know what you’re thinking. How can you reduce the costs of taxes?
When you purchase a car, you pay a sales tax on the total. The percentage will be different depending on the state. But did you know that the city and county where you purchase the car can also add their own sales tax?
The amount will vary by county and city but by doing some research you can find a dealership where the sales tax will be lower. Another item to note is that the sales tax charged on a vehicle will usually be different from your state’s sales tax rate on other purchases.
What other charges does your state charge on a car purchase? Registration fees can be another cost surprise. This fee covers the registration, title, and license plates.
But did you know that the vehicle cost or the size can have an effect on the registration fee amount? In general smaller cheaper cars will have lower fees, so this can be another consideration when you’re vehicle shopping.
2) Insurance costs
Did you know that insurance premiums can be one of the most expensive costs of vehicle ownership? While some factors such as age and where you live can be out of your control, there are some steps you can take to reduce your insurance costs.
How safe is the car you’re looking at? When calculating insurance costs, the different safety systems on a car can help to lower the insurance rate. The body style and trim selected can also play a factor as well.
The biggest increase in premiums? If you choose a performance style vehicle or a more expensive car, in general, you can expect to pay more for insurance.
This doesn’t mean that you should avoid these types of vehicles and you can still save money on your insurance premiums. One way can be to increase your deductible on the policy. The deductible is the amount you have to pay for repair costs before the insurance will start to pay.
See also….Common Auto Insurance questions
3) Fuel Costs
How many MPG does that car get? Whether it’s online or at the dealership, we’ve both looked at the numbers when shopping for a new car. You may be surprised to find out that there’s more to saving fuel costs than the MPG.
How long will you keep the car? Let’s say that one car gets up to 45 mpg and costs $25,000 while a similar model gets 26 mpg and costs $20,000. While you’re saving money at the pump each year, it can take seven years or more to make up the price difference between the two models.
Another surprise you may find is that electric and plug-in hybrids aren’t as expensive as you think. There are several tax incentives depending on the state that you live in. These tax savings can often bring the price of the vehicle down to comparable levels of other cars.
4) Maintenance Costs
Let’s be honest, regardless of the car you choose, it will need some type of repair work done. This can range from normal wear and tear to accidents such as flat tires or collisions.
Keeping up on maintenance can be an easy way of lowering repair costs in the long term. When you let your car go overdue for an oil change your engine can become damaged if you wait too long.
Luckily there are newer vehicles equipped with sensors and using synthetic oils that take the guesswork out of when you should change your oil. When searching for a car you can look for models that have lower maintenance requirements and have a higher dependability.
Let’s face it, we can’t prevent every accident. Technology has changed to make your road trips safer and this can save costs in the long run as well.
Lastly a word on extended warranties. In some cases, they can help reduce repair costs once the warranty expires but you have to pay attention to what it will cover. In some cases, they will only cover certain parts.
5) Finance Charges
This last one can catch a lot of people off guard. We’ve all heard the dealership ask us “How much do you want to pay each month?” While it seems like they have your best interests in mind, it can end up costing you thousands of extra dollars of interest.
Shop around for interest rates. Credit Unions and banks can sometimes have much lower rates than what the dealership offers for financing. Better yet, get pre-approved so that you have more control in negotiating the price.
These are just five extra costs to be aware of when purchasing a car. Like you, I was tired of spending thousands of dollars extra each time I went to a dealership. I hope that you found the information helpful and enjoyable.
If you have any other thoughts on extra costs I invite you to comment below and share it with your friends and family that will find this information helpful. If you’re looking for ways to pay off bills when you have no money, I invite you to click on the guide as well.