Other than your home, your car might be the most expensive purchase that you’ll ever make and to make a wise decision it is important to be aware of all the hidden costs associated with purchasing a used car.
Here’s a complete list you must follow if you’re in the market for a used car:
- Always compare the vehicle based on selling prices and payment quotes. The comparison will prove whether the vehicle will be afforded during ownership or not.
- Other than the price and payment structure, variables that can affect the total cost of your purchase and ownership of a used car are state licensing fees, local tax rates, leasing charges, loan interest rate (if financed).
Loan Interest Rates
Whenever you finance a vehicle, a monthly payment is made for a predetermined number of months. This monthly payment is totally dependent on the amount of down payment, the term/length of the loan, and the loan’s interest rate. Usually, the loan for a used car has a higher interest rate compared to a brand new car. To reduce this you can make a bigger down payment or extend the term of the loan. Finding a financing with a lower interest rate can also be very helpful. Hence, it is recommended to figure out the financing before shopping.
State and Local Tax Rates
You might be able to save yourself from paying tax amount if you choose to buy a car in a different city or county within the same state or in a neighboring state. Most states and cities require car buyers to pay sales tax based on their place of residence rather than where a vehicle was purchased. Many states also require a temporary license plate from the state it is purchased and adds to the total cost of the purchase.
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If you picked a car far from your residence, be sure to examine all the potential tax benefits carefully and check the hidden tax pitfalls resulting from the deal. Also, choose a less expensive vehicle as taxes are based on the selling price of the vehicle.
State Registration and Licensing Fees
Each state sets its own registration and licensing fees. These fees often are the same regardless of the type of car registered and licensed. In some states, however, fees vary depending on the age of the vehicle, purchase price, taxable value, weight, owner’s driving record, whether the car has a lien against it, among other factors, so choose to keep all factors in mind.
Every used car has a back-end story and some of them are nothing short of a nightmare. So, always look for the Vehicle History Report before purchasing a used car. It will help you know if a car has a clean history or hidden problems. We have data available for every used car sold post-1982.
