I’ve overpaid on car deals more than once, and each time I didn’t realize it until I got home.
Not because the price was wrong, but because of how the deal was structured.
In one case, I agreed to a warranty thinking it covered normal wear, and later realized it didn’t. Another ~$5k product showed up in the monthly that I hadn’t fully registered in the moment.
In another deal, I went in expecting around $100/month and walked out closer to $200/month. The numbers were shown, but not in a way that made the full impact obvious while I was deciding.
Nothing was hidden in the contract. I just didn’t see it clearly while I was in the middle of the deal.
Curious how others actually catch this before signing.
How do people actually catch hidden costs when buying a car?
byu/coach_c1206 inFrugal
Posted by coach_c1206
12 Comments
I am guessing you need to understand the total otd price you are getting. Basically multiply your monthly payment by the number of months?
Anyway, this is on the frugal section. If you cannot pay a car in 36 months and put 20% down or more, then you cannot afford that car.
u need to learn how to calculate a payment amount based on these three items – total loan amount then length of loan and then the interest rate
Learning how to negotiate is an art, and taking your time and reading what is put in front of you is vital.
If you are asking what I do, when deciding whether to purchase I consider total cost after all fees/extras and generally don’t purchase extras like additional warranty unless mandatory. Considering total net cost also includes cash vs financing. In theory financing may be less expensive if rate is low enough with option to pay off earlier, but I’ve never personally seen it occur. My experience has been if dealer is giving an abnormally low rate on financing, they are making up the financing loss elsewhere. As a result, I’ve always chosen cash without financing.
This is why I don’t buy from a dealership. You will get a better price with the average person, and most can’t pull a fast one. This also requires having cash usually though to get the best deal.
It’s simple, do not take out a car loan. If you can’t afford the car after saving up for a few months then you can’t afford the car. Buy a used car that is 5 or more years old from a reliable brand. Check the carfax. Buy private party. Keep up on maintenance and drive it til it dies, then repeat.
Don’t sign anything you don’t fully understand. Take your time and read through every document. Ask questions. If you feel rushed or that you’re not getting real answers, leave.
Warranty issue: it sounds like you didn’t read it carefully.
“Another deal”: you had a car payment which was the problem but you also said you didn’t see it clearly so again, no one scamming you, you just didn’t read carefully.
You find the car you want, you look up online about how much it should cost, you go find the new or used one that you want, you and the seller agree on the cost of the car, and you write a check for that much, and you’re done. There’s no other payments.
What are you doing at home to realize the problem that you’re not doing during the buying process?
Go slow. Don’t let anyone rush you into anything. If you don’t understand or are unsure, ask questions.
Don’t be afraid to take your time.
Best tip I’ve ever received for buying through a dealership is to call every one of them and get a final price over the phone. If they can’t give you numbers over the phone, don’t make that deal. They trick you into coming in by saying they won’t give out numbers, then hold you hostage for hours and intentionally throwing out numbers to confuse you. Don’t play that game. Get firm numbers over the phone, only go in to sign the paperwork.
You need to be asking for the “out the door” price or simply the grand total. Dealers are sneaky and will gladly let you think you’re paying less.
If you’re financing through the dealer, do the math on how much interest you’ll be paying them. That’s worth subtracting some off the initial price.