The word "hidden" might be a little extreme, as all fees have to be written in your contract and agreed upon, but the sentiment remains.
It's not hard to get confused by all of the complexities of auto financing. If you're looking to acquire financing for your next vehicle, you should know all of the common hidden fees and potential penalties you could face in your auto loan.
Hidden Fees & Your Car Loan
As you know, a few overlooked fees here and there can really add up. These fees are usually pushed on you near the end of the sale, after you've already picked out your car and are sitting down with a financial specialist. Some dealerships will rope you into these extra fees, as it increases their profits on the sale. Here are a few to watch for:
- Registration and Licensing. This is a cost that may not be paid at the dealership. Many states allow dealerships to take care of registration and licensing fees on site, but some do not. If you have to go to the DMV or Secretary of State, the extra cost could come as a surprise.
- Tax and Title. These costs are rarely calculated into the negotiating price of a vehicle and therefore can come as a surprise to many consumers when they sit down with the dealer's financial specialist. Be sure to calculate these extra costs into the price of the car.
- State and Local Tax. Another hidden cost that is never mentioned in the sales process is how much extra you will have to pay automatically in state and local taxes. This can serve as a useful negotiating technique as well. When a salesman tries to convince you that the cost of a certain car is well within your budget, it might be worth reminding them of these extra costs that have gone unmentioned.
- Credit Insurance. This type of insurance will help pay your monthly car payment if you are unable to for some reason in the future. More often than not, there are cheaper alternatives to credit insurance that will still help you pay your monthly bills in the event you are laid off, injured, or deceased.
- Extended Warranties. Depending on how used the car your planning to purchase is, the dealership is likely to pitch you some form of extended warranty. Depending on terms, the used car warranty can either be a scam or a good deal, so read the fine print carefully before you decide.
The most common penalty new car buyers worry about is whether or not they will be charged extra for paying off their auto loan early. This is commonly referred to as a pre-payment penalty. It is important to ask if your auto loan contract has a pre-payment penalty in place, but most loans do not.
Finding Available Financing
The financing experts at Auto Credit Express have all the resources you need to get into a new car, truck, van or SUV in no time. By understanding the hidden fees and penalties sometimes associated with auto loans, you can be sure to ask questions and avoid a bad deal. Even if you have less than perfect credit, we can work with you to get affordable financing for a reliable vehicle. Fill out our fast, safe, and easy online finance application to get the process started today!