Hidden Costs: What To Look For When Buying An Affordable Car

The Top Hidden Cost of Buying a Car You Need to Know About

Purchasing a car is a monumental moment in your life. As one of the biggest purchases you’ll ever make, it’s essential to understand what you can afford and what hidden fees may be unknowingly increasing the price of a car. Western Slope Toyota acknowledges the financial strain a new car can have on your overall budget and spending capabilities. We are here to streamline your purchasing process as our experts discuss the hidden costs of buying a car and what fees to look for to lower the price. If you’re ready to buy a new car, use this guide to get the best deal at our premier family-owned and operated Toyota dealership in Grand Junction, CO. Visit us to take a test drive of a new or used Toyota for sale today.

Understanding the Sticker Price

The overall vehicle price, or the MSRP, is the suggested retail price provided by the car manufacturer at the point of sale. This includes the price the dealership paid for the vehicle, add-on costs, and the profit the dealer hopes to earn. The MSRP is designed to keep pricing consistent between dealerships. However, dealerships are not required to list at this price, and, in some cases, car buyers can manage a lower sticker price with the help of dealer incentives or if the current vehicle is not in demand and dealers are looking to bring in new inventory. Additionally, the destination fee is a potential cost that covers shipping the vehicle from the manufacturer to the dealership.

However, dealers can also sell cars at a price higher than the manufacturer’s suggested MSRP if the car is in high demand and they know it will sell quickly. That being said, the sticker price often represents the starting point of negotiations. Car buyers can negotiate with dealers to come to a fair price before signing the paperwork and taking their new car home.

Negotiate From the Invoice Price

Negotiations should start with the car price, focusing on what the dealer paid for the vehicle. You can find the invoice price by searching various sources online. These online resources will help determine what the dealer paid and how it informs what you should expect to pay at the point of sale.

Doing your research before heading to the dealer is one of the best ways to avoid additional costs when buying a new or used car. Additional costs, such as dealer fees and unnecessary upgrades, can significantly affect the purchase price and should be considered during negotiations. To score a lower price, negotiate from your points of strength, such as your opening bid or offers from competitors. Another helpful tip is to negotiate one aspect at a time to avoid creating confusion and to settle on the lowest price possible for your new vehicle.

Hidden Fees to Watch Out For: Dealer Fees

Many dealerships add dealer fees to the prices of new cars to cover the cost of new license plates, dealer prep services, sales tax, or other associated dealer costs. This fee also applies to pre-owned vehicles as one of the hidden costs of buying a used car you may not expect.

If you understand the fees and the costs they cover, you can negotiate to help save money. Another hidden cost to watch out for is loan payment fees, which dealers might add during the purchase process. Dealer fees typically include charges covering various things, including:

Documentation Fee

A dealer documentation fee, or “doc fee,” covers the cost of preparing all the paperwork, like the sales contract and car registration, after the sale. Each state has its own standards for what dealers can charge, and this fee is typically not negotiable.

Destination Charge

If you’re buying a new car or one not currently at the dealership, expect to pay the destination fee, also known as the destination or freight charge, to cover transportation from the manufacturer to the dealer. The destination fee is often a significant additional cost and is typically non-negotiable. You’ll pay the exact cost regardless of whether you buy your car a great distance from the assembly line or pick it up from the factory floor.

Destination Charge

Inspection and Emission Fee

A car must pass a state safety and emissions inspection in many states before it can be sold. Dealerships often pass the cost of this inspection on to the buyer. Prices may vary by state and provider, but they're typically inexpensive.

Sales Tax and Registration Fees

This isn’t a dealer fee, but it can still add a considerable amount to the cost of buying a new vehicle. Registration and title fees are additional expenses not included in the sticker price or MSRP. These fees vary from state to state and need to be considered separately when discussing the price of a vehicle with a dealer. Tax rates vary by state but average about 7%, and they will be calculated after all other charges.

Finance Charges

Finance charges are fees associated with a car loan, including interest, loan origination fees, and other fees. It's important to consider GAP insurance, which covers the difference between the car's value and the loan amount if the car is totaled. Understanding finance charges can help you understand your loan and ensure you can afford the payments. These charges can be considered a hidden cost of buying a car, especially if you are unaware of them at the time of purchase.

Know the Total Cost Before You Go

When you shop with Western Slope Toyota, we’re upfront about our costs and how they could impact your monthly car payment, so that you can anticipate hidden costs of buying a car and incorporate them into your budget. It's also important to consider routine maintenance and upkeep costs before making a car purchase. You’re more than just a sale to us; you’re family. Visit Western Slope Toyota to learn more about the hidden costs of buying a car and shop today.