Car dealers are experts at extracting as much money as possible from buyers. Of course, the dealer will try to get the highest price they can on the cars they sell, but there are many other sneaky costs involved. Here are some of these hidden new car costs and how to avoid them.
1. Tax, Title, and License
You may think you’ve finished negotiating the price down to a level you can afford, but wait — there’s more! When you see the final cost for your vehicle, you will be hit with tax, title, and license fees on top of the price you negotiated. This can add up to thousands of dollars on your new car.
Save by keeping these costs in mind when selecting a vehicle (less expensive vehicles have lower tax and title fees). Here is a calculator you can use to estimate tax, title, and license costs in your state. Negotiate the vehicle price considering the full cost including these fees, so you can end up closer to the total you had in mind.
2. Splash Guards and Bug Shields
Since you are spending so much to buy a new car, why not spend a few hundred dollars more to protect it? The dealer may offer to install splash guards and bug shields to help protect your new vehicle from damage. These items are very profitable for the dealer.
Save by having accessories installed elsewhere for much less if you decide you still want them.
3. Extended Warranty Coverage
New cars come with warranty coverage, but you can extend the length of the warranty or add additional items to be covered for an additional price. Are extended warranties a good deal? Not according to Consumer Reports. On average, you will pay more for the extended warranty coverage than you will gain from having it.
Save time and money by skipping the extended warranty coverage offered on your new car.
4. Oil Change Packages
Your dealer may offer you a chance to pre-pay for a number of oil changes. This special offer may make the cost of the dealer shop competitive with your regular shop. This is a good deal only if the dealer is in a convenient location, and only if you stick to just getting the discount oil changes. Service is typically more expensive at dealer shops.
Only buy the oil change package if the dealership is in a convenient location. Otherwise, you will spend more time and money getting there, or may not get around to using it at all.
5. Gap Insurance
If you are financing your vehicle, you may be offered gap insurance from your dealer. This protects you from the depreciation of your vehicle if it is involved in an accident and is a total loss. Your comprehensive and collision coverage will only pay for the current value of the vehicle, which can be less than amount you would need to pay off your entire car loan balance. Buying gap coverage at the dealer is typically much more expensive than adding this coverage with your insurance agency.
Save on gap insurance by purchasing this from your insurance agent instead of the dealer.