Buying a new car is exciting and stressful at the same time. While you’re thrilled to jump behind the wheel and take the open road by storm, you’re also worried about the mountain of red tape and expenses that await you.
When shopping for a car, the sticker price is the expected cost, but many car buyers are surprised to find out they have several other expenses to cover. Here are seven hidden car buying costs that could take the brakes off your budget.
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Auto transportation costs if buying out of state
Since so many car shoppers are purchasing their vehicles online, they have to consider the price of shipping cars state to state. If a car is for sale in one state and you live in another, you can’t expect the seller to drive it to you for free.
You have to figure out how to transport the car from point A to point B. Hiring a transport company is usually less expensive than paying through the nose for a new vehicle at a dealership. You can trust your new car will arrive without damage and unnecessary mileage with a reliable auto transport company.
Maintenance and repair expenses
Your vehicle will need routine oil changes, tire rotations, brake repairs, and battery replacement. While new cars have warranties that cover early expenses, eventually, you’ll have to pay for all repairs out of your pocket. Car repairs usually cost hundreds of dollars or more, so be sure to adhere to your car’s manufacturer-recommended maintenance schedule.
Interest rates
You pay interest that adds a significant percentage to the sticker price when you lease a car. If you’ve got outstanding credit, you might be able to keep the interest rate below two percent. You might pay between five and ten percent if you have bad credit.
Taxes and fees
Buying a car involves several taxes and fees. All states have licensing fees, sales tax, and registration expenses that add to the vehicle’s sticker price. Some communities have sales tax rates that exceed ten percent. Combine sales taxes with loan interest, and the cost of buying an automobile rises significantly.
Extra protection
When you buy a new or used car with a loan, the finance expert will work hard to get you to purchase extra protection that includes everything from rust proofing to VIN etching. These services don’t add much value to a car, but they add dollars to your car payments.
Insurance
If you want to drive a car legally in any state, you’ve got to have insurance protection. The coverage varies by state, but one thing is sure–the price is high. Some insurance companies require monthly payments, while others ask you to pay quarterly or biannually.
Keep your credit score high and your driver’s license free of blemishes for the lowest rates.
Destination and delivery
Another unexpected cost is the destination and delivery charge. Car dealerships pass the trip from the factory to the lot on to you. It’s usually a few hundred dollars, and you’ll have a hard time getting the dealership to waive it.
Wrap up
Buying a car is expensive. Before you consider your monthly payment, don’t forget to factor in sales tax and interest rates along with ownership expenses.
