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The Hidden Costs and Fees of Buying a Car

By Vast Bank on 05.27.2021

If you’re reading this right now, we know you’re a smart car shopper who does their research before making a big purchase. You’ve likely read up on how to buy a new car, assessed your budget, and used a monthly car payment calculator to understand how much you can afford. But even budget-savvy shoppers may overlook some of the hidden costs of car ownership. To keep your finances in shape, make sure you factor in these not-so-obvious expenses.


Insurance costs are based on both your driving record and your vehicle’s value. If you’re a lead-foot looking for a luxury car, be prepared to spend a chunk of change on monthly insurance premiums. And don’t try to low-ball this one—under-covering your new car is like downhill mountain biking with a baseball hat instead of a helmet. Budget for full coverage to protect your finances and pick a smart deductible.

State fees

You’ll need to register your new car with the state—and of course—they charge a fee for it. Most dealerships will handle registration for you, but make sure you’re clear on whether that will be your responsibility. Another state fee is the sales tax. This one can really take buyers by surprise. For example, if your state’s sales tax is 9% and you select a $30,000 vehicle, you’ll need to cough up $2,700.

Dealer Fees

Your financial paperwork will include things like a “doc fee” and “S&H.” These sound cryptic, but they’re pretty standard. A doc fee (documentation fee) is a set amount that the dealership charges to cover the cost of preparing and filing your state paperwork. S&H is more cryptic, but most dealerships will include it to cover some operating costs. The good news is these fees can be negotiated before you sign the contract, just be prepared to haggle. 


Gas prices are volatile, and only seem to increase as the years go by. For that reason, you need to consider the cost of gas in your budget before you make your new car purchase. Will you be commuting long distances every day? How much would a hybrid or electric vehicle save you? On the flip side, how much will a gas-guzzler cost you? Use a gas cost calculator to help you add it all up. 


There’s no way to predict repair costs with precision, but Kelley Blue Book has a great calculator that estimates your potential repair costs based on national averages. Check it out! New cars with warranties may have no out-of-pocket repair costs, but the warranty itself can be more costly than it appears—especially an extended warranty. Compare the cost of the extended warranty to the estimated repair costs.


Routine maintenance shouldn’t break the bank, but you should add it to your budget nonetheless. In fact, proper maintenance lowers your total car cost by reducing the number of repairs you’ll need in the long run. Learn how much routine car maintenance will cost and factor it in along with the results from your monthly car payment calculator before you shop.

Sounds like a lot of work? Yes. But it’s the smartest way to go about buying a new car. Accounting for these additional costs on top of the results from your monthly car payment calculator will ensure that you’re prepared for whatever happens down the road!

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