7 hidden costs of buying a new car

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Once you’ve negotiated and agreed on a price for buying a car, keep in mind that other costs await you. These are the so-called hidden costs that can make your $30,000 car suddenly cost more like $35,000. Some of these aren't all that "hidden," but they're certainly not included in the price you're quoted for the vehicle by the dealer.

Here are 8 hidden costs to keep in mind:

1. Document preparation.

This should be a very minimal charge or nothing at all. Paperwork is part of selling the car and it is not your responsibility to pay for it.  

2. Dealer preparation charges.

You should find out about all charges in advance, including this one. Typically, the dealer is reimbursed from the manufacturer, so this charge is unnecessary. Unless it is a minimal amount and you have won on other negotiation points, you should not pay for this.

3. Dealer-installed options.

Like all extras, these are "options" - meaning they are your choice and not the dealer's. Don't get talked into high mark-up items like undercoating or special fabric protection if you don't want them.

4. Extended warranties.

This is optional, so you should not be told that it's part of the car's price. Often the manufacturer's warranty covers what you will need. If not, make sure you know exactly what this extended warranty will and will not cover.

5. Your credit rating.

A strong credit rating will qualify you for the best interest rates from auto manufacturers, banks and credit unions. But with only fair or mediocre credit, you'll likely pay higher rates and qualify for lower loan limits. Find out your credit rating /score in advance so you know where you stand with lenders. You can do this through services like www.equifax.ca.

6. Leasing.

For those who are leasing, besides early termination fees and over-mileage charges, there can be numerous administrative and hidden costs. Read the contract carefully.

7. Insurance.

Most of us forget to check in advance with an Auto Plan agent to find out how much insurance will cost for the new vehicle.  This will vary depending on vehicle price, make and model.  Make sure you factor this into your monthly budget so you’re not taken by surprise. 

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