Car Buying Tip: How To Avoid Hidden Fees

Once you've found the car you want, it's time to sit down with your sales rep for a little car negotiation.  After a little back and forth on price, figuring out your interest rate, and calculating your monthly payment, you're ready to sign on the dotted line, right?

Not so fast!

When you read the fine print you may find that additional fees and charges have found their way into your auto loan contract – including add-ons you didn't necessarily ask for.

Usually you are so focused on and negotiating the most affordable monthly payment you often forget to read the car loan contracts fine print. By the time you review and sign the paperwork, if the sales rep is throwing industry terms at you that you don't fully understand, you are sure to miss these hidden fees that can drive your payments up.

Here are a few insider tips to make sure you have no regrets.

First - Read the Fine Print

While this seems pretty obvious and self-explanatory, it's amazing how trusting we can be. Honestly, the last time you bought a car, did you read and fully understand the auto loan contract before you signed it? Most people don't. Some unscrupulous car dealerships are betting on that.

Also, make sure there are no blank spaces on your auto loan contract that can be filled in later - wherever there are blank spaces, write in "$0" or "N/A." 

Because most people don't read the fine print, some dealerships will slip in additional, verbally undisclosed charges or extras with huge markups.

Second - Typical Extras

Most of us are familiar with learning about the standard features of a vehicle and then figuring out which additional features we are willing to pay extra for. But here are some extras to look out for when reviewing your contract:

• Fabric Protector
• Window Tinting
• Bed Liners (for trucks)
• Paint Sealant 
• Credit Life Insurance
• Car Mats 
• Car Alarm
  
• Lo-jack

If the sales rep attempts to tell you that some or all of these extras are "standard" for every vehicle on the lot, ask to order your car from the factory, or suggest the dealership trade with another dealer that hasn't pre-packaged their vehicles. Extra products can add thousands to the negotiated price of the vehicle.

The Problems With Extras Occur In Two Areas:

First - Rather than suggest specific extras individually priced, the sales rep lumps all the products together and pushes you to buy them as a package. A WAY OVERPRICED package.

Second - Unscrupulous sales reps can add thousands of dollars to the amount financed for these products, but not disclose the price increase until the last possible moment, when the contracts are being signed. For instance, most dealerships pay about $30 to have a car pinstriped. But it's not uncommon for them to charge the buyer $150 or more. And when they couple it with all the other "extra's" it's typically about $2,500 for the whole "package."

Your best bet - as always - is pre-approval for a car loan.  With pre-approval you will know how much you are pre-approved for a new vehicle, and will be able to leave a little room for warranties and GAP insurance, without getting duped by the dealership into purchasing unwanted items.

You can protect yourself from blindly signing an unfavorable car loan contract by doing your homework , going to a car dealership with a good reputation, being prepared, asking questions, double checking behind your sales rep and being pre-approved.

For a list of our recommended car loan lenders click here

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