When you buy a used car, there are a lot of costs involved that you can’t consider making room for in your budget. But you should. Additional fees such as taxes, title and license fees (TTL) and dealer documentation fees impact the overall cost of your loan and may even have to be paid out of pocket.
Costs differ across the country
The taxes and additional fees that must be paid for a vehicle can make a significant difference between the sale price and cost of a car at the gate. Because the cost of taxes and license and plate for your vehicle varies by state, it’s a good idea to know what you’re getting into before you head to the dealership. Using online tools, such as car loan estimators and tax calculators, can help you figure out how much you need to budget for these costs.
Another type of fee to watch out for is documentation fees, or “documentation fees.” These may also appear on your contract as a processing fee and may vary by dealership and state. Some states impose a cap on the amount a dealer can charge, while others do not. Rarely will you get financing where a dealership won’t charge any application fees.
Pay taxes and fees when buying a car
TTL fees cannot be negotiated, so you should be prepared to pay these fees. If you have good credit, you may be able to incorporate these costs into your loan. Be aware, however, that if you add them to the total cost of financing, you will end up paying more interest over the term of your loan. If you have credit problems, you may not be able to add these fees to your loan, so you’ll usually have to pay them out of pocket.
A good rule of thumb is to be prepared to pay your TTL upfront – along with your down payment – if you are financing through a dealership. This way you are reduce your loan to value (LTV) ratio and save money long-term.
Taxes and fees when buying a used car from an individual must be paid to the DMV or the Secretary of State, as individuals are not permitted to collect taxes.
[do_widget text! ad]
Get your best price
Unlike TTL costs, documentation fees can – and should – be negotiated. Most dealerships usually tell you that these fees are non-negotiable, but it’s worth it, especially if the cost seems outrageously high. Typically, doc fees can range from $100 to $500, or even more. But, since these fees are not regulated in all states, some unscrupulous dealers use them as a catch-all to increase their profit.
For example, a documentation fee of up to $1,000 or more could indicate that there are other costs a dealership is trying to squeeze into the vehicle, such as costs recouped on a push trade-in offer. , sweater or drag. Beware if a dealership is quick to waive these fees – it may be a sign that you are paying too much for your vehicle.
Probably, you will have a hard time convincing a dealership to waive their fees. Thus, you may want to try to offset these costs by asking the dealership to reduce charges in other areas. See if they’re willing to add some of the accessories they often charge for. Things like wheel locks, floor mats and cargo nets are all examples of things they may be willing to cut the cost for.
Don’t be blindsided at the end
When it comes to financing a vehicle, know all of your costs before you sign the paperwork. To ensure taxes and fees don’t push you beyond your net budget, ask the dealership for their initial price up front. This is the amount you want to use to trade, as it should include all taxes and fees that you will be charged at the end. This way, you won’t be surprised by any extra charges added to the price you agreed with the dealership.
If you’re ready to negotiate your next car loan, but aren’t sure where to turn, leave Auto Express Credit open the way. We work with an extensive network of finance brokers who can help you get the loan you’re looking for. Simply complete our online car loan application form today, and we’ll get to work finding you a local dealer who can help!
