There are plenty of small fees and charges associated with car buying that you may not know about. So-called hidden fees may not be secretly inserted into a deal, but they can significantly raise the final cost of an auto loan contract. Though many fees are standard, some can be negotiated, and some you might not have to pay at all.

What to Expect When You Finance a Vehicle

The price of the vehicle you're planning to buy only starts with the cost of the car, which is typically referred to as the manufacturer suggested retail price or MSRP. Also called the sticker price, this is just the jumping-off point for the price of your vehicle, and the reason most car commercials say "starting at" when they advertise prices.

Before you dive into your first, or next, car buying experience, be sure to know what to expect in terms of additional charges. These fees can certainly seem hidden if you don't know they exist!

Are There Hidden Fees in Auto Loans? Here's are some charges and fees to expect on a car loan:

  • Down payment: Many lenders require a down payment to get a car loan started, and if you have bad credit, it's almost guaranteed. Typically, subprime lenders that work with credit-challenged consumers require $1,000, or 10% of the vehicle's selling price down. Whether it's required or not, a down payment is a good idea no matter your credit score.
  • Interest charges: Interest charges accrue daily based on how much you owe on your loan. Just how much money you have to pay depends on the interest rate you get on your loan. As a general rule, the higher your credit score, the lower the interest rate you're typically assigned. These fees aren't hidden, but also aren't something you see upfront. The longer you owe the more you pay. Be clear on how much you're looking at by asking your lender how much interest you’re projected to pay by the end of the loan term.
  • State and local taxes: These vary depending on where you live. Even if you purchase a car in a different state than you live in, the taxes are determined by your home state, and where the vehicle is registered. Sales tax is non-negotiable, though not every state taxes vehicle sales.
  • Title and license fees: These are standard charges that are typically collected at the dealership for plating and titling the car. Dealers also have no control over these fees, since they’re regulated by the state you live in.
  • Doc fees: This varies by dealership; it's the cost of a dealership handling the paperwork for your state. This fee can range from $0 to $1,000. Look up your state’s minimums to get an idea of what to expect.

These fees are usually standard when you finance a vehicle. Remember that the sticker price in the window is just part of the total cost of purchasing a car.

Fees You Can Negotiate

Not all the fees associated with an auto loan or vehicle purchase have to be paid for. Some fees, such as optional dealer add-ons, can be removed. Others, such as your interest rate or the dealership doc fee, may be able to be negotiated to a lower cost.

Many charges on your loan may be able to be negotiated or removed such as:

  • Dealer fees – Also referred to as dealer add-ons, these are a wide range of services and optional items. It could be easy to overlook some of them if you don't know what you're looking at. These fees can range in price from a few dollars to hundreds or thousands of dollars depending on your situation and the vehicle you're buying.
  • Floor plan fees – The cost of keeping a vehicle on the lot.
  • Advertising fees – Dealership costs for advertising, presumably to get you on in the door.
  • Destination and delivery charges – Fees associated with the cost to ship a car from the manufacturer to the dealership.
  • Extended warranties – Optional, and sometimes called a service contract. They’re typically for used vehicles that are no longer covered under the manufacturer’s warranty.
  • Paint and fabric protection – Optional, typically unnecessary.
  • Rustproofing – Optional, may be worth it in states with winter snow or coastal states where salt causes damage to cars.
  • Credit insurance – Optional; it covers your car payments if something happens to you.
  • Theft protection – Optional insurance coverage that marks vehicle parts and puts them into a traceable database. Often includes identity theft protection as well.
  • VIN etching – Optional; etches the vehicle identification number into the windshield glass.
  • Interest rate markups – Dealerships are able to pad the interest rate assigned to you by the lender and profit from it. Not all dealerships do this, and you may not know if they do, which makes this the only truly hidden fee on some auto loans. To combat this, research average interest rates before car shopping, so you know if yours seems too high.

If saving money on your next auto loan is the goal, research is your key to negotiation success. First, make sure you know where your credit stands. This should be the first step anytime you take on new credit. It doesn't harm your credit to check your scores and reports yourself, and it can make a big difference in your negotiating power when you know what the lender is seeing.

Your interest rate and loan term are often decided by the credit score range you fall into. Knowing what your score is and what's on your credit reports allows you to research what other borrowers in similar credit score ranges see on average. Your interest rates and loan terms are likely to differ somewhat, but knowing the average gives you leverage to combat a dealer that's offering you seemingly unrealistic rates.

Remember, you don't have to take the first deal you're offered if it's not the right fit for you.

Building the Deal That Works for You

In order to get into the right car loan for your situation, you have to plan for the total cost of vehicle ownership, and that means more than the costs tied to your loan. When you budget for your next car, take into account how much fuel, maintenance, and insurance are going to cost, as well. These everyday expenses can make or break your auto-buying budget.

Take some time to shop for an affordable auto insurance policy as well. When you’re financing a vehicle, lenders require that you carry full coverage. It’s typically more costly than basic coverage options, and there are many insurance companies to choose from. Try to secure an affordable insurance policy before you head to a dealer since you need proof of insurance before you can drive the car off the lot.

Another way to ensure that you're getting a good deal is by sticking to your guns on a budget. In order to do this, though, you have to look at the big picture. When you're shopping for a vehicle, don't be a payment shopper. If you're more concerned with getting a car that fits into your monthly payment range, and not the overall cost of it, you could be getting in over your head. Remember to balance both your monthly payment and your loan term so that you're not paying more for the vehicle than it's worth.

Ready to Get Started?

Now that you know what to expect from the extra charges you may see in your next auto loan contract, you can begin taking the next step – finding a lender that can work with your credit. If you're in a pinch due to bad credit, Auto Credit Express wants to make your auto loan experience smoother. We've cultivated a network of special finance dealerships across the country that are signed up with subprime lenders.

These lenders know that you're more than a credit score, and want to get you into the vehicle you need. Don't waste time and money driving around to car lots that may not be able to help. Start off on the right path by filling out our fast, free, no-obligation auto loan request form, and we'll match you to a local dealer.