General Question

rowenaz's avatar

What are the hidden costs in buying a new car?

Asked by rowenaz (2421 points ) July 20th, 2007

I went on consumers reports and edmunds and got the bottom line car prices, and I THOUGHT was getting a decent deal, but when I go to the dealer's to sign the final paperwork, there are documentation fees, conveyance fees, tire something, inspection fees, transport, etc. that have been added on....which of these do I have to pay and which can I refuse? Any suggestions for haggling a better price? I live in Connecticut. Thanks for you help!

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8 Answers

Michael's avatar

There can often be a pretty big difference between the agreed-upon price and the "out-the-door" price. The "out-the-door" price often includes tax, title, registration, and various other fees, depending on the state. Most of them are mandatory (you can't get out of paying the taxes, for example), but it does sound like a few you mentioned are unnecessary. My suggestion is to go back to the salesman and say you thought you were negotiating the "out-the-door" price, and that with all these fees, you need to renegotiate. He won't like that much, but he might bring the price down a little. For the future, my advice is to always make it clear that you want to negotiate only over the full out-the-door cost. Make the sales person take account of the fees and such up front.

rowenaz's avatar

But if I ask for the out of door price, how do I know that they won't include $275 for title and registration fees (which the dealer tried to do) when I can go the the DMV and do this myself? Again, thanks for your help!

Michael's avatar

He definitely will include those fees, and though I guess you could do that yourself at the DMV, why would you? It'll cost you the same and you'll have to go to the DMV, after all. The dealer doesn't make money on the registration and title fee (those are fixed), but he profits if you agree to a price without considering the extra fees. By making sure you are both only talking "out the door", you wont get hit with any surprises at the end.

I know that sometimes it feels like the dealer is screwing you with those extra fees (and there may indeed be a few that are unnecessary - you can ask the dealer to only include those fees that are required by law) but in truth, the fees are unavoidable. Instead of trying to get around them, just include them in your budget. If you only wanted to spend 10,000, then haggle your way into a $10,000 "out the door" price. If you're successful, then you'll have spent around 9000 or so on the car and the remaining on the fees, but since you wanted to spend 10,000, then who cares?

Dealers deliberately neglect to mention the fees until the end, but you can insist on negotiating a total cost.

Michael's avatar

Incidentally, you should also remember that you'll be spending a nice chunk of change on insurance. That's another "hidden" cost of buying a new car, and although that money doesn't go the dealer, many people neglect to take account of that cost. Just a heads up.

Modern_Classic's avatar

As with any purchase, there's the opportunity cost of the money itself. Do you really need a car? If you don't need it to commute to work (the operative word is _need_) or drive kids to school, consider doing without and using public transportation, taxis, walking, and Flex Car or renting for those time you absolutely must use a car. Chart out the full cost of owner ship, which includes insurance, depreciation, maintance not covered by warranty, etc. compared to alternate transportation. IF you don't need it for regular work related transportation or chaufeuring , you might be surprised how much you can save.

rowenaz's avatar

How about the following things: conveyance fee and documentation charge (are they they same thing? charges for title/plates/registration?). Are they negotiable? Will the dealership let me say no, and go the the DMV myself? What about destination charge? After I negotiate a price, what kinds of addtional charges can I expect to find on the final invoice, and which can I negotiate away - I know that there are extras which I can turn away, like rust proofing, and additional warranties... Also how many miles can I expect to see on a new car? One car already had 200 miles on it! Thanks again for everyone's help.

hearkat's avatar

200 miles is a lot for a "new" car. I've purchased 4 new cars in my lifetime, and all have had less than 30 miles on them. 200 sounds as if it's been used as a demo or it's been on the the lot for a while, so I'd use that as a negotiating point to lower the price a bit.

Most of the DMV fees are NOT negotiable and if you are getting new plates, I believe that it has to be processed by the dealer. I used Edmunds before buying my car last Sept. and I thought they had info on there about what those add-on fees were in my state. I'm sure they and the other car shopping sites have articles that discuss this in further detail, and you may want to go to your state's Motor Vehicles website to confirm the fees and related policies.

GoDupont's avatar

Exactly what are Destination Fee’s and is this something by law that I’m responsible for paying or is it an “add on” fee by the dealership?

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