Buying a new vehicle can be stressful. For most people, it’s a large purchase and a big commitment over a number of years. Consider that the average transaction price for light vehicles in the U.S. was more than $33,000 in 2016, according to Kelley Blue Book.
But shelling out for a new vehicle isn’t just about the purchase price—it’s about all the costs associated with buying a new car, and there are more fees than you might expect. Here are a few expenses to factor in, both at the dealership and after you’ve driven your new car off the lot.
The documentation fee
This is a fee a dealership charges to process your paperwork, and, while in some states there’s a limit on this fee, in many others there’s not.
“We’ve heard of some states that were charging $900, so this can be very jarring,” says Ronald Montoya, senior consumer advice editor at car site Edmunds.com. Even if this fee seems outrageous, Montoya recommends negotiating harder on the price of the car versus haggling over this line item.
“This is something that’s just commonly accepted as a part of the business,” he says.
Because the profit margin on some vehicles is so low, some dealers will add hundreds of dollars of extra options to a vehicle to drive up the price. For instance, a dealer might add nitrogen to the tires, a LoJack recovery system or wheel locks, all of which will cost extra.
You’re then in the position of trying to negotiate down the extras before you even get to the actual price of the car.
“You’re not obligated to buy these things if you don’t want them, but some [dealers] are going to give you a hard time about it,” Montoya says.
If you find that you’re getting a lot of pushback on add-ons, you may be better off finding another dealer who won’t be as prone to piling on the extras.
Sales tax and registration
This shouldn’t be a surprise, but sometimes people don’t realize how much the sales tax, fees and registration will add to the bottom line—generally about 10% overall. This includes local sales taxes and any fees for license plates, title and registration for the car, which are required.
“I always recommend that people get the ‘out-the-door’ figure,” Montoya says. “That’s what the price of the vehicle is going to look like after all the fees and taxes.”
Negotiating for a car when you can’t pay the full amount in cash means you might also be negotiating for the best financing deal, which can complicate things. Focusing on interest rates and monthly payments can cloud the bigger picture—that is, what you’re actually paying in the end.
For the best haggling power, it’s a good idea to get pre-approved for a car loan at a bank, credit union or online lender before you go car shopping. That way, you already know you’ve gotten the best interest rate you can find, so you’re just looking to get a good deal on the car.