Hidden Costs when Buying a Used Car (Or, Why It’s Not as Cheap as You Think It Is)

So you found a used car that’s a total steal. That’s awesome!

…Or is it?

Unfortunately, buying a used car is usually not that easy. While you might think you’re getting a brag-worthy deal, chances are it’s not quite as cheap as it seems–at least, not once you factor in all the hidden costs associated with purchasing a used vehicle.

So before you sign your name on that title, make sure you know exactly how much you’re going to pay–and whether or not you can afford it.

Here are the extra fees you can expect when buying a used car.

1. Dealership Fees

The big kicker when buying used cars in Canada is the dealership fees. These are those seemingly random costs that are suddenly sprung on you when you go to close the sale.

Dealers can tack any number of fees onto your contract, including:

• Vehicle registration fee
• Title fee
• License fee
• Documentation fee
• Compliance fee
• Emissions testing fee
• Floor plan fee
• Advertising fee
• Dealer preparation fee

Some of these fees might seem ridiculous (Floor plan fee? What even is that?), but unfortunately, used car dealers in Canada are allowed–and even, in some cases, required–to charge them. But here is the important part. By law, these fees have to be disclosed in any and all advertisements by the dealership. This is known as all-in pricing.

That’s why it’s crucial that you’re aware of these expenses before you sit down with a dealer. If you’re a really good sweet-talker, you might even be able to get some of them removed.

Of course, your best bet is to just buy from a dealer that won’t charge you up the a$$. At Ride Time, we promise no documentation fees, and we work with you to make sure you pay as little as possible–no matter what your credit’s like.

2. Finance Charges

Unless you’re a billionaire, you’re probably not paying for the entire cost of your vehicle up-front.

If you have to take out a loan to pay for your used car (and don’t cry, most people do!), you’re going to have to fork up a fairly hefty amount in interest charges–especially if you have less-than-stellar credit.

So do your financing homework before you talk to a dealer. If you can find better rates and terms at a different lending institution than what the dealer will offer you, you might be able to talk them down during negotiation.

OR, you can just go with an all-in-one dealer like Ride Time. We work with a last-chance lender, so we can literally get bad credit car loans for anyone–and we won’t take advantage of you, either. To find out how we can help you, click here.

3. Add-ons

Most used car dealers in Manitoba are going to try to squeeze every last penny out of you–and that means tempting you with a slew of add-ons once they’ve got you hooked on a vehicle.

Here are some different add-ons to watch out for:

• Credit insurance
• Extended warranties
• Anti-theft devices
• Vehicle accessories
• Paint and fabric protection
• Pre-paid oil changes and tire rotations

The dealer might try to tell you these expenses are all necessary and will even save you money in the long run, but don’t be fooled–they’re just trying to upsell you. Unless you’re personally convinced you need an additional service, steer clear.

4. Sales Tax

This isn’t really a hidden fee–everyone knows (or should know) they have to pay sales tax on their car–but it’s definitely a big expense that a lot of people forget to factor in when budgeting for a used vehicle.

Vehicle sales tax can add hundreds or even thousands of dollars to your final bill, so be sure you calculate what you’ll need to cough up when you’re looking at the initial price. Of course, the less you pay for the vehicle, the less you’ll pay in taxes. But tax rates and credits vary depending on location, so do your research first!

5. Insurance

Here’s another cost that should be a given but is often overlooked during the decision-making phase.

Car insurance is one of the most expensive aspects of owning a vehicle, so it shouldn’t be taken lightly. Your insurance premium will vary depending on a bunch of different factors, including:

• Your type of insurance policy and amount of coverage
• Your age, location, driving record, martial status, and retirement status
• Your vehicle’s age, make, model, trim level, and powertrain
• Where you park the vehicle at night
• How many miles you drive the vehicle each year

Generally speaking, the newer and more performance-based a vehicle is, the pricier it will be to insure. So if you’re just shopping for your middle-of-the-line used cars in Winnipeg, you should be fine.

No matter what vehicle you want, though, you’ll definitely want to investigate its insurance costs first. That way, there’ll be no surprises after you’ve signed the contract.

6. Maintenance

The up-front costs of a used car are only the beginning. Once you’ve finally settled up on all those initial fees, you’ll have to start paying for some recurring ones–like maintenance.

Regular service is absolutely crucial to your used car. Not only will it keep your vehicle running right, it’ll also help keep its value running high. That’s key when you decide to resell.

Depending on the age of the used car you’re looking at, you might be able to find a recommended maintenance schedule from the manufacturer. Otherwise, try to calculate service costs as best you can. On average, you’re looking at a couple of thousands of dollars a year.

7. Fuel Costs

Fuel is another recurring expense that’s sure to rack up your car budget.

Not trying to be condescending here, but please be sure to consider the vehicle’s fuel economy before you buy it. We know it seems obvious, but you might not realize just how gas-guzzling (and wallet-emptying) that F-350 you’re eyeing is.

Also take into account how long you plan on owning the vehicle. For instance, you might initially pay more for a fuel-efficient hybrid, but it’ll pay off pretty quickly if you drive it for two years or more.

So…How Can You Actually Know If You’re Getting a Good Deal?

Yeah, we know–that’s a lot of hidden fees. Unless you’re some sort of math whiz, it’s hard to calculate them all on your own.

That’s why it’s so essential to work with a used car dealer you know you can trust. Without someone who will go to bat for you, you’re on your own against all those extra costs that are out to get you (and your hard-earned cash).

So come get to know us, the Brothers of Bargains. We promise we won’t saddle you with insignificant fees. And the ones we do have, we’ll make sure you know exactly how much they cost–and exactly why we need to charge them. (We wish we didn’t have to, but sometimes a dealer’s gotta do what a dealer’s gotta do!)

If you’ve got questions about our auto financing options in Winnipeg, take a look at our Financing FAQs.