How Much a Car Really Costs (Beyond the Sticker Price)

When you’re shopping for a car, the sticker price is a good place to start — although it’s typically not what you’ll actually end up paying. To make sure you get through the buying process without surprises, it pays to do your homework. The more you know up front, the better prepared you’ll be.

1. FINANCING

   This is where you can run into significant additional costs. Unless you pay cash or get 0 percent financing (which is essentially free money), you’re likely going to be paying interest on a loan. Even a percentage point difference on your interest rate can add hundreds of dollars each year to your payment.

   For example, let’s say you borrow $25,000 and pay it back over five years. With a 4 percent loan, you’ll pay $2,624.78 in interest. Drop that to a 3 percent loan and you pay only $1,953.04. That’s $671 in savings over the life of the loan.

   While dealers can and do offer loans, many experts recommend shopping lenders in your area who typically offer the most competitive rates.

2. ADDITIONAL COSTS

   Whether you’re buying new or used from a dealer or a private party, be prepared for things like taxes and other expenses that can add up quickly:

   • Sales Tax. Sales tax can add hundreds — or even thousands — to the sticker price. State and local taxes vary widely, so be sure to check before you shop.
   • Title and Tags. The cost of registering and licensing your vehicle can add $100 or more up front. Even if you’re transferring license plates from a trade-in to your new car, a transfer fee normally applies.
   • Dealer Fees. Some dealers will add processing and other fees to the overall cost. These can range from a few extra bucks to a few hundred. While sales, title and tag costs are non-negotiable, dealer fees may be bargained down if you’re willing to try.

   Whether you’re buying new or used from a dealer or a private party, be prepared for things like taxes and other expenses that can add up quickly.

   • Extended Warranties. Some sellers (mainly used car dealers) may offer you an extended warranty, although you’re not obligated to buy one. The cost varies depending on the length and type of warranty.
   • Vehicle History Report. When buying a used car, you may want to purchase a vehicle history report if one isn’t provided by the seller. Expect to pay between $35 and $45 for a typical report.

3. INSURANCE

   When you have a car, you’ll want to insure it. In fact, nearly every state requires that you carry some level of coverage. Without insurance, you could be on the hook for thousands of dollars or more if you’re in an accident or if something happens to your car.

   While costs vary by state, factors such as where you live and what kind of car you drive can also impact insurance rates. The addition of other coverages, such as collision, comprehensive, medical, uninsured/underinsured and others, will also have an impact.

   By considering these and any additional coverages, you can get an estimate of overall insurance cost by checking providers online. Of course, tickets, previous accidents or other driving record blemishes can cause your rates to go up.

4. MAINTENANCE

   At some point, every car needs things like oil changes, new tires, wiper blades or a battery. These and other maintenance costs can vary significantly depending on the make and model of vehicle.