When buying a used car it is important to understand the total cost that you will be charged. Buying a new car would result in many additional fees that you may not be aware of, but will be forced to pay in the end. However, buying a used car is much smarter because you have full control over the "hidden fees" that a dealership would not tell you about. It's important to understand that when buying a used car off a lot there is normally no guarantee offered by the dealer. So, before you decide to buy a car it's a smart idea to dig a little deeper into the history of that specific car.
What Information Do You Need?
When buying a car from an authorized dealer you must receive some very important information before signing your name and taking over ownership. Unless you want to be left with a multitude of random fees, or even worse, a broken down car that has been in four accidents, you should get the following information from the dealer:
-Does the car have damages that amount to above $2000 to repair: A dealer is required to give you this information, and largely to your benefit. Purchasing a car that was in a major accident decreases the value and may result in additional repair fees that come out of your pocket. Depending on the accident, you should make sure there was no serious work done to the car that would result in additional charges to you within the first few months.
-Was the car ever used as a police vehicle, taxi, emergency rescue, a rental or leased vehicle, or even in organized races: A dealer is required to give you this information in writing because it's very important to the buyer. If the car was ever used as any of the above examples then it's value has decreased significantly.
Now that you understand a few factors that determine the actual value of the car, it's time to go over what charges you are expected to pay when purchasing a used car;
- Dealer Prep Costs: Before you arrive on the lot the dealer's staff has done significant cosmetic work to the car. They will make sure the car looks as good as possible for you, and in return you will most likely pay a small fee that is included in the overall price.
-Sales Tax: When you sign the papers and buy your used car you are going to have to pay a sales tax. Depending on what province you are buying the car the sales tax varies, and will range from 8-10%.
-License Fees: If you did not already have a license then you will be required to pay an upfront fee. Once again, depending on the province this fee will vary.
-Insurance Fees: As you are probably already aware of you will need to pay insurance fees on your new car. This fee will vary according to the type of car you are buying and your driving history. Consult your insurance agent for more detailed info.
-Interest Fees: If you arrange to finance the car from a dealer then you will be charged interest fees on a monthly basis. Interest fees will vary according to your contract with the dealer so it's important to know what your monthly payment will be before you buy the car.
-Repair Costs: If the car needs any type of repairs then you will be charged for this. As mentioned earlier, repair fees are something to look out for when buying a used car.
-Costs of Upgrades or Additional Options: When buying a used car the dealer will also offer you upgrades or other options. These options will only cost you money if you decide the upgrade is worthwhile.
-Total Cost: Although this is self-explanatory most people forget about all the small costs that amount to the total cost being higher than the original price tag. With the above list of additional fees you will be able to make a well-educated guess on the actual price of the car.
Before you buy or finance a used car it is important to go through the above list and know what you should be looking for. Buying a used car can be a great experience, and you can get the best value for your dollar as long as you know what to look for. Don't hesitate to ask the dealer any questions you may have about additional fees, lending fees, and other costs. The dealer will give you a straight answer and you will be well on your way to buying your next dream car.
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