Buying A New Car: Which Fees Should You Pay?

Buying a new car can be quite the ordeal, especially if complicated financing is involved with subsequent monthly payments and other transactions fees that are unfamiliar or unknown to a buyer. There are going to be fees added into a contract for a vehicle, and car buyers need to know which ones they should pay.

There are any number of standard fees that are part of a new car contract, so what are some of those basic fees that every car buyer should know about before purchasing a new vehicle?

Vehicle Registration

Vehicle registration fees are determined by the state in which a new car owner resides. The fees include the registration and license plate costs. A registration is a document that indicates legal ownership of a vehicle. Car dealerships take care of this service, so new car customers are spared a visit to the DMV (Department of Motor Vehicles). The newer and more expensive the vehicle as well as the weight of the vehicle will determine registration costs.

Sales Tax

This figure can produce sticker shock to many new car buyers. Sales tax varies by the state in which a new vehicle is purchased. In addition, many cities and counties tack on an additional tax along with the state tax. So, the total amount of sales tax paid will depend on where the vehicle is purchased within a state.


There are incentives with sales tax, particularly with trade-in situations and the purchase of a new car. If a trade-in sales tax credit is given by a state, a new car buyer is only taxed on the difference between the price of the new car and the trade-in value of the old car. Some states do not allow for the trade-in allowance and the full amount of sales tax will have to be paid on the purchase of the new car.

Rebates and other incentives can lower the price of a vehicle, but many states will still charge sales tax on the purchase price of the vehicle before any rebates are applied. So, a buyer still pays tax on the full price of a vehicle in spite of the rebate.

Documentation Fee

This is one aspect of the fee process that can fluctuate. Car dealerships include charges for documentation (doc fee). The charges are to cover preparation and sales contract filing costs and any other extraneous paperwork. Some states have document fees that are not regulated. One car dealership may sell a buyer a vehicle at a decent price but, at the same time, include a high document fee to offset any customer savings, plus that document fee will likely have a sales tax attached to it. Would-be new car buyers should investigate what dealerships charge for document fees. Any fees that are higher than average for a state should be negotiated to offset the fee.

Document fees definitely affect the new-car buying experience and if a car dealership provides genuine and helpful service, perhaps the document fee won’t be such a sting. Also, if the vehicle purchase price is lower and the dealership is giving a true savings to the customer, there may be a gain there, even with a high document fee.

Other Fees

Other fees attached to a new car buying experience can include dealer fees, advertising fees and environmental fees for laws that concern local environmental rulings.

Dealer fees could arise in the form of dealer preparation and shipping and handling type of charges. Investigate these fees and, if necessary, challenge the fees in contract negotiation with the dealership.

Advertising fees could be listed on the vehicle’s invoice, which is an actual charge by the manufacturer of the car to the dealer; however, some dealerships will include an additional advertising fee within the sales contract itself as a way to offset their own advertising endeavors. In any case, negotiate these dealer fees before entering any contract.

Environmental fees are levied by individual states and are nominal, usually around $40 or less.

Online Fee Calculators

There are online calculators available to determine or estimate fees that relate to buying a new car. DMV websites and other online sites provide calculators for guidance through the fee process and can give a new car buyer an idea of what those fees will entail. They are not exacting, but they do give a general idea as to charges in different states.

There is no doubt that buying a new car is going to involve a fee structure that may be hard to follow or is unclear. If you plan on buying a new car make sure you are prepared for the fees you will face.

How Long Should A Car Loan Be?

How Long Should A Car Loan Be?

Monthly car loan payments today can seem like the mortgage payments of a couple of decades ago, and most average loans for new cars now are around $500 (plus) a month, or more. Consumers today are purchasing new, high-end and larger vehicles that reflect higher sticker prices, which has future new car owners thinking about securing longer vehicle loans. Sometimes those high monthly payments can be a bit much for most any budget, so how long should a car loan be, anyway?

Average Loan Duration

The average car loan period is currently 72 months and it looks as though an 84 month loan duration is in the works. Most loans for new vehicles were originally for 60 months with 72 months following that. Even used car loans can run around the same amount of time (at 72 months) and that is with quite a bit less money being financed for a used vehicle, but it takes that period of time to even pay off a used vehicle.

Credit reporting agencies note that many potential new and used car owners are looking for decent interest rates with manageable monthly payments. A five-year loan can bring a large monthly payment and that is one reason why consumers resort to taking longer loan stretches to afford the cost. In the long run, they end up paying more in interest to pay for a vehicle.

Most financial experts don’t advise assuming a car loan that is longer than six or seven years. There are reasons why a five-year or 60 month loan period is recommended. Here are a few reasons why that amount of time is suggested:

Interest Rates

The length of a loan is going to determine the interest rate, and the longer the loan, the higher the rate will be. The loan will include both the rate of the loan for the number of months/years and any finance charges over that time period.

60 Month Period Loan

Say a car or other type of vehicle is being financed for a 60-month period as opposed to a 72-month period. The average amount financed by a new car owner on a 60-month loan is in the $31,000 range and the rate of interest is round 3.2%, which brings a monthly payment to over $550 and a finance charge of around $2500. This close to $600 a month payment is a hefty bill that could seriously cut into a person’s income, so it is understandable why a new car customer would look to a lengthier loan.

72 Month Loan Period

A loan of 72-months or 6-years is obviously a longer loan period, and such a loan would carry a higher interest rate that would be around 7 percent. The average 31,000 figure for loan backing would lower the payment to a little more than $500. This figure may seem to be one that is workable, but the finance charges to carry the loan would be close to $7,000 during the 6-year duration of the loan. It’ easy to figure out that the is considerably more interest than the 60-month loan.

Used Vehicle Loans

Used cars loans follow somewhat the same pattern, as the average financing today for used car loans is almost $22,000, which would equal out to a payment of almost $400 a month. That looks to be a workable figure, but interest rates are considerably higher for used vehicles. The rate of over 9 percent is somewhat normal, so the finance charges alone would be close to $7,000.

Other Factors

There are other factors to consider with vehicle financing that include:

  • The depreciation of a vehicle over a loan period
  • The resale value of a vehicle once a loan is complete – (a five-year old vehicle is going to bring a higher value as opposed to a seven-year old vehicle)
  • The negative equity- total down payment affects the amount of negative or positive equity in a vehicle

Ways Around Costly Vehicle Financing

There are ways to reduce monthly payments when five, or even seven-year vehicle payments are out of the reach of a person’s budget. Car payment or car affordability calculators are available to any potential vehicle owner. They help car buyers determine what cars and lower payment options are available to them. It’s a simple process and can be found online. All that is necessary is to insert a workable monthly amount and cars in that price range will be made accessible.

Another alternative is purchasing a used vehicle. Though the interest rates are higher, used vehicles are lower in cost, so there is less of a loan to carry and any payments will be lower. It is advisable, however, to always carefully review any terms in the loan to determine if there are added charges and costs in the agreement.

Length of a Car Loan

In terms of how long a car loan should be, reviewing loan terms for five, six and more years is the first step. Shorter terms (even less than five years) are always advisable but what is an affordable monthly payment amount to a car buyer should always be first in determining financing.

Secondly, every contract involving a car loan should be carefully reviewed to determine the exact amount that a car buyer is paying for the vehicle. Other rules that go along with and govern financing include putting down a substantial down payment (20 percent) and keeping any payment around 10 percent of total (monthly) income.

Whether you are shopping for a car loan for a new or used car, and are not sure what is the best financial approach for your budget situation, complete the online contact form and a financial expert will get back to you with the information you need to make an informed decision.

Troubleshooting Your Car’s Air Conditioning System

If you have noticed issues with your vehicle’s air conditioning system, you may be able to troubleshoot the problem on your own. Once you think you know what the problem is, you will be better able to explain it to your mechanic when you take it in for repair.

Weak Airflow

There can be many causes for a vehicle air conditioner to experience weak airflow. One cause could be mold or mildew that has accumulated in the evaporator core. This could prevent air from reaching your vents. It could also be as simple as a loose hose, usually a blower hose. If the fan is not blowing at all, your ventilation fan may need to be replaced. Weak airflow could also be caused by core case, blower house or evaporator core seal failure.

Air is Not as Cold

If the air conditioner is not blowing air that is as cold as it used to be, it is important to bring it in for a check as soon as possible. The problem could be a Freon leak, a clogged expansion tube or a refrigerant charging hose. It could also be a failed compressor or compressor clutch, a vacuum leak or damaged condenser or evaporator. A failed blower motor or blower motor resistor can also lead to warmer air from your air conditioner as can a failed switch, fuse, relay, control module, blend door or solenoid. If your air conditioning system has developed a leak, it is considered an open system which could allow moisture to enter the system and damage other parts. For this reason, as soon as you notice the air conditioner is less cool, you need to bring it in for an inspection or you could face very expensive repairs.

Air Starts Cool, then Turns Warm

If your vehicle has a clogged expansion valve, the valve that distrubtes refrigerant to yoru evaporator, it could cause the air conditioner to blow cool air at first before turning warm. This is because refrigerant cannot flow properly with the valve clogged. You may also have a faulty compressor clutch or a blown fuse. This could also indicate a leak which needs to be checked immediately.

Air Conditioner Smells Bad

If you have noticed an unpleasant “gym locker” odor coming from your air conditioner, you may simply need to change your air cabin filter. If the case’s drain is blocked, water may sit in the evaporator and mold can accumulate, leading to the unpleasant smell.

Black Death

One problem that can occur in vehicle air conditioning systems is what is known as Black Death. Although not as gruesome as the plague that killed millions in the 14th century, it is just as deadly to your car’s air conditioning system. Refrigerant in your air conditioner acts as a lubricant, much like oil in your engine when it is running. If the refrigerant breaks down due to leaks or other problems, parts of your air conditioning system can start wearing, sending sharp metal particles throughout the unit. If this should happen, you may need to replace your entire air conditioning unit.

If you are suffering from problems with your air conditioning system after a collision, contact Elmer’s Auto Body today. You can set up an appointment online with the simple query form or give us a call so that we can review your air conditioning system and get you back to riding in comfort.