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Originally Posted On: HIDDEN COSTS YOU SHOULD BE AWARE OF WHEN BUYING A NEW CAR | PWInsider.com

You have saved enough money to buy a new car or to upgrade your existing one, so what next? Cars give us the freedom and flexibility to go anywhere anytime, and they have become an integral part of our lives. The process of shopping and buying a new car is always exciting and fun. However, many people overlook or are not aware of the hidden costs of a new car. Let’s have a look at some of those hidden costs so you can plan accordingly when buying your new vehicle.

We may not be able to pay for a new car in cash; that’s why we tend to get a loan, which can then entail finance charges. The interest rate can make or break you, and the experts at Plenti suggest that finding the best interest rate while offering a reasonable down payment can help you save hundreds of dollars yearly. Several factors determine the financing charges, such as your credit score, the loan duration, buying a new or used car, and more. Look into your financing options before deciding, as you will be committed to it for years to come.

To drive a car, it must be registered in your name, which means you have to pay for registration. When you buy a new car, you pay for a registration transfer from the dealer to you, and then you have to renew this registration every year. The fees are different from one state to another, and your local vehicle registration center will tell you how much you need to pay and when.

Every state has a different sales tax and stamp duty, and the amount can be reduced depending on your case. A leased car is taxed on lease payments and not the full price of the vehicle. Stamp duty payment differs from state to state, and are based on the value of the car.

It’s obligatory to have insurance on your car almost everywhere, so this is not really a hidden cost, yet the amount you have to pay is hidden. Car insurance is useful as it covers an accident’s costs, which can cost you hundreds or thousands of dollars. Many types of insurance cover the costs of accidents to your own car or others’. The cost of insurance is calculated based on your car’s make, model, and year, as well as your driving record, age, sex, among other factors. The smart move is to check with your insurance agent before buying a new car to estimate the amount you are going to pay.

Buying a new car can be expensive. However, keeping a car in good shape is an on-going cost that you should be aware of. All car manufacturers nowadays advise their customers to perform routine service to their cars at their service center. This service usually includes an oil change and tire rotation, and if they detect any faults in your car, they will fix them for a price. Cars parts generally wear after some time, so you have to change tires, brake pads, filters, and other components. Before buying your new car, check the prices of all these services and maintenance costs as an expensive car with affordable service and maintenance may be the right option for you.

The most common fee the dealership can charge you is the documentation fee, which covers the cost of the administrative work needed for the transaction. Look into the necessary amount to be paid to ensure they are not overcharging you, as sometimes you don’t even need to pay this fee. A preparation fee is when the dealer prepares the car for you, washing the car and performing an oil check. If you want the car delivered from the manufacturer, the dealer may apply a delivery charge. All of the dealership fees are negotiable, and most of the time, they are not obligatory, so don’t be afraid to negotiate or refuse to pay those fees.

It seems obvious that cars need fuel to operate, and this is a cost you should calculate beforehand. Every car’s make and model has a different fuel consumption rate, so according to your daily commute, different gas types, and the type of roads you drive on, you should pick a car that won’t consume too much fuel. The gas prices fluctuate all the time, so it might be hard to calculate the exact amount you’re going to pay weekly or monthly.

Though depreciation is not a cost, it affects the investment you put into your new car. Any purchase we make is an investment, and that applies to cars. Depreciation is when your car’s value decreases over time; from the moment you buy a new car, its value is reduced by 10-25%. However, the depreciation varies from one car to another, as it depends on make and year, so if you’re not planning to keep your car forever, then check its depreciation rate.

A dealer may convince you that the extended warranties are part of the car’s price, but that’s not true. Don’t dismiss all offers for extended warranties, as some of them may offer serious savings in the long run. The extended warranties are either offered by the manufacturer or the dealer, and they include paint, rust, fabric, or mechanical failure protection. Usually, the manufacturer warranty covers all the basics you need, so take a look at what the extended warranties will cover and decide if it’s worth it.

The hidden costs are plenty and diverse; some of them are paid once, and others are on-going costs. Knowing those costs from the beginning will give you an insight into which car is more suitable for your needs. Keeping a car on the road seems expensive. However, with good planning, you can save a lot of money. Finally, enjoy the smell of a new car and hit the road with your favorite music playing.