If you are buying a car through financing, you are probably preoccupied with the auto loan cost. As a car buyer, it is essential for you to consider all the other costs that come with purchasing a vehicle. Find out beforehand the other expenses that come with car buying so you will not be unpleasantly surprised when you finally go to your preferred Seattle dealership.
Vehicle Registration Fee
This amount pays for the vehicle’s title and registration, as well as its license plates. Instead of you doing the work (i.e., registering the car and assigning the title), the dealer assumes the responsibility. The money you pay doesn’t go to the dealer, though—it is charged and collected by the state.
Vehicle registration fees vary by state. It is computed based on home address, license plates, as well as vehicle type and weight. For instance, here in Washington, the license plate fee is $20. Passenger vehicles weighing 4,000 lbs and under are charged $43.75; those weighing 4,001 to 6,000 lbs are charged $53.75; while those weighing 6,001 to 8,000 lbs are charged $63.75.
This fee goes to the state and helps fund services such as road maintenance. The automobile tax in Washington is the same as its standard retail sales tax: 6.5 percent. County taxes also apply, plus an additional tax of 0.3 percent of the sales price.
Trade-In Sales Tax
If you will be trading in your current car for a new purchase, consider yourself lucky. Washington allows a tax break for trade-ins. Instead of being taxed on the total amount of the new car, you will only be taxed on the price of the vehicle minus the trade-in value. If the vehicle price is $20,000 and your current car is valued at $5,000, you will only be charged tax for $15,000. Depending on the total sales tax, you can save some money.
Charged by dealers, this is the amount that covers the cost of handling paperwork related to the auto purchase. In 2009, a state law raised the document fees in Washington from $50 to $150. This is the maximum amount until June 30, 2014. According to Senator Tracey Aide, who sponsored the bill that became law, the fee is voluntary and is as negotiable as the vehicle price.
Know that dealers cannot charge you the documentation fee unless they disclose about the fee in their advertisements. Without the disclosure, you should refuse to pay the amount.
As the name suggests, this fee is charged to cover costs of advertising the vehicle. It is a cost of business, but dealers ask car buyers to pay for it. It is actually charged by the manufacturer to the dealer, but the amount is sometimes further marked-up to make money for the dealership. If you find a hefty advertising fee in the sales contract, you may dispute it. You also have the option to just try to get the car at a lower price to offset the additional expense.
Destination Charge and Dealer Prep Fee
The destination charge is the price of having the car delivered from the factory to the dealership, while dealer preparation fee covers the costs of washing the car and other services that make the vehicle ready for sale. The former is government-mandated and is not negotiable, but the latter falls under the category of ‘cost of business.’ Therefore, you should challenge the dealer prep fee should you see it in the contract.