It is common knowledge that one of the keys to making a successful purchase of a new private car is working within your budget. Now, there are a couple of ways to do this. One way would be to set a limit for the total amount that you are willing to spend for a private car. This is rather limiting, however, so other people choose instead to plan their budget according to monthly installments, which is more manageable and will allow for a significantly higher budget.
What People Don’t Factor In
When setting a budget, however, many people only think about the selling price of the private car. Their thinking goes something like this: I’m willing to spend $18,000 for a new sedan. They say that you get your money’s worth, so that means that I should try to max out my budget. So I’m going to look for a private car that is as close to my limit as possible.
The problem with doing this is that there is no room left for “hidden expenses,” which you will have to shoulder in addition to the selling price of any private car that you want to purchase. These hidden costs can amount to thousands of dollars, so overlooking these when setting your budget can be very costly for you.
Hidden Costs for Private Cars
1. Registration and emission fees. Unless otherwise states, don’t assume that the price fixed on the private car that you want to buy includes registration and emission fees. Depending on the state you’re in and the type of car, you may have to set aside anything form $50 to $500.
2. State sales tax. This is another expense that is added onto the selling price of the private car. Again, the rate differs from state to state, so be sure to inquire about it before deciding on a particular car or dealership.
3. Insurance. Each state requires a minimum amount of insurance for all registered private cars, so this is really an unavoidable extra expense.
4. Antitheft device. Nowadays, security is an very important feature of any car, and you’ll probably want (or need) to install an antitheft device in your car. Again, don’t forget to factor this into your budget.
5. Extended warranties. Warranties should be included in the selling price of the car. But if you want to extend that warranty, it’s going to cost you extra, so be sure to carefully weigh the pros and cons.
6. Document preparation fees. All purchases of cars need paperwork. Don’t worry though, because while this is an unavoidable hidden expense, it really shouldn’t cost you much.
Minimizing Hidden Costs
One way to minimize hidden costs for private cars would be to register it in a state that has the smallest rates for registration and tax. You’ll also want to read up on how to find cheap car insurance.
You may also be interested in car loan (or as the Danish term is Billån).