Additional Costs While Buying a New Car

By | October 31, 2013

There are some additional costs while buying a new car. You may successfully negotiate the car price, but you cannot avoid these additional costs. Most of the people do not include these in their budgets, because of lack of aware. Documentation fee, vehicle registration fee and sales tax are the most common additional expenses. There are some charges for legal and some are other. Now we will see them in clear.

  • Documentation fees: To cover the purchase related paper work costs, the documentation fee is charge by the dealership firms to the car buyers. In some states, the law does not properly regulate the documentation fees. With this advantage, some dealerships sell the car at attractive price, and add a heavy documentation fee while drawing the contract. If it is high, negotiate the car price to offset the documentation fee more aggressively.
  • Vehicle registration fee: the state governments charge the vehicle registration fee. It is to cover the cost of license plates, to assign a title or legal proof of ownership and to register the new car. The dealer generally provides this service and the money goes to the state.
  • Sales tax: The sales tax amount is higher than the most of the people expect. They will consider only the sales tax rate by the state and left the other inclusive components in it. The counties and cities are also added in it. For example, you bought a car for twenty five thousand dollars at eight percent tax rate. The sales tax on the car is two thousand dollars. A quarter percentage point will added by the counties and cities. The amount you pay is varying from the state to state.
  • Dealer fees and delivery charges: Some dealers add the other fees while writing the contract and these give them official sounding names like dealer prep, S&H and even shipping. The dealer delivery cost is set as per the dealer’s discretion. The delivery charges cover the costs from manufacturer to you. For example holding, insurance, compliance, detailing the car, and administration. Find out early about these fees, and then you can know clearly about how much they are charged and negotiate accordingly. Check for no additional dealership fee is added before you singed on the contract.
  • Stamp duty: The stamp duty is varies among the states. Check the stamp duty for your state before you plan for budget for your new car.
  • Advertising costs: The advertising fee is another one, which is rarely found in the invoices. It is charged by the manufacturer to the dealerships and the dealerships add this expense in invoice. You should have to pay for it. Sometimes the dealerships can add this because of their own efforts on advertising. In such cases, you can bargain for this also.

It is always better to ask the dealerships to know clearly, what charges the ad for a new car and plan accordingly.