5 items you should never pay at a car dealership
The typical American can have more than a couple of cars in a lifetime. However, car dealers sell cars every day and use this experience for their financial gain.
When you buy a new or used car, you often end up paying more than the sticker price. Car dealerships are adept at trying to charge you for unnecessary options, features, and hidden costs.
Every smart device can download a GPS app, so you don’t need to pay for GPS when buying a car? Are you sure you want to pay for options like illuminated floor sills, dynamic steering, or automated lane departure warnings?
It’s your right, but you will likely be under pressure to make these purchases no matter what.
And at least those options are immediate – car buyers pay a lot of hidden costs they never know about.
An average new car costs $ 40,000 and an average used car costs $ 20,000. Watch out for these five hidden costs the next time you visit a car dealership.
Inflated MSRP or sticker price
The first point of negotiation is the price of the sticker, sometimes referred to as MSRP. However, the initial negotiation should be the price charged or the price paid by the dealer for the car.
A sticker price may be inflated to reflect the invoice plus projected profit margins to the dealer and other additional costs. The car dealership will not offer to negotiate from the invoiced price.
Look up the prices charged on sites like Edmunds, Consumer Reports, or CarsDirect and use the data to negotiate the price you pay.
High interest rates with extended loan options
Know what you want before you go to a car dealership. Car dealers will push you to buy more expensive models. Then they can sign you up for larger loans with higher interest rates and longer to pay.
The interest rate for an auto loan for a new car is between 3% and 15%, while it varies between 4% and 20.67% for a used car.
Since the average car loan is paid off over seven years, you could unintentionally pay a fortune in interest.
Documentation, concession or origination costs
A car dealership may charge you $ 200 or more for the paperwork involved in processing a car sale transaction. Make sure you don’t overpay the paperwork fees, especially since the paperwork is inherent in the transaction.
Basically, you’re paying them to do their job and sell you a car, something you’re already paying for.
Delivery or destination costs
The dealership may charge you for the costs of transporting and delivering the car to their lot long before you buy it.
You cover their business costs, but why? Worse yet, you could end up financing the additional payment over years at interest.
A typical extended warranty will set you back $ 1,500, while the average auto repair bill is less than $ 200. Dealers earn money on commission by forcing you to sign one.
Unless the car is a lemon (sorry!), You will likely be paying higher coverage for the benefits you actually receive.