9 Car Buying Costs That People Often Forget to Budget For

Look into these budget-wrecking hidden fees as you research which car is best for you.
Updated April 11, 2024
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Car shopping can be stressful, but it may get worse if you don’t anticipate the hidden costs of car ownership or fees and issues that can arise during the buying process.

Sit down with your budget and decide what you can afford. That can be a big first step if you're trying to eliminate money stress.

Then, keep some of these hidden fees in mind so you don’t get surprised.

Gas costs due to poor fuel efficiency

Heather Craig/Adobe gas price humor

Paying attention to fuel efficiency is especially crucial now that gas prices are hovering around $4 a gallon.

Research a car’s fuel efficiency and see how much you can allocate in your budget toward monthly fuel expenses. You may want to rethink your options if a small change in gas prices could lead to a big problem with your plans to boost the money in your bank account.

Car insurance for some models

NAMPIX/Adobe Car insurance policy with red car toy and blur image of man hand

Don’t make the mistake of thinking car insurance is one-size-fits-all coverage. You may be surprised by the differences in how much it costs to insure various makes and models.

So, check with your insurance provider before you start shopping to compare the different rates for coverage depending on which car you decide to buy.

Pro tip: For help comparison shopping, check our our guide to the best car insurance companies.

Interest costs tied to longer financing terms

chartphoto/Adobe handshake of two businessmen when selling a car in a motor show

If you’re getting a lease or plan to use monthly payments to buy a car, check the fine print regarding the length of your contract. Some dealers might push you toward car leases and loans with longer terms.

Longer terms allow dealers to advertise their cars with cheaper monthly costs. But over the long haul, you will pay more in interest expenses. So, even though your monthly payment is more affordable, it will cost you over time.

Pro Tip: If you’re saving for a car now, check with your bank or credit union as you get closer to purchase time. They might be able to offer you a car loan with better options than those provided by a dealership.

Taxes from the state, county and city

Karen Roach/Adobe State Taxes this way

There are several taxes to take into account as you plan to budget for a new car. It starts with the sales tax on your vehicle, which might include state, county, and city fees.

Remember that a car is a big-ticket item, so a relatively small percentage of a big purchase price can add up to hundreds or thousands of dollars. For example, buying a $35,000 car in a state with a 9% sales tax means you may have to pay around $3,150 just in state sales tax.

Registration fees for upgraded vehicles

selensergen/Adobe Dollar and Car

When you buy a car, you probably will owe a registration fee. Not only does this fee vary from state to state, but it also can be different from vehicle to vehicle within the same state.

That means that while you likely anticipate having to pay the registration fee, owing a significantly higher fee than expected for your new and upgraded vehicle is not unusual. You also may need to consider additional registration fees that some states are adding for electric-vehicle registration to make up for fading revenue from gas taxes.

Pro Tip: Check with your state to find out the different registration fees for the makes and models that you’re considering. You might be able to eliminate certain cars from your list based on how much it costs to register that vehicle.

Maintenance and repair for expensive models

Noey smiley/Adobe Man planning monthly budget

An expensive car often requires costlier maintenance and repairs. Oil changes, for example, may cost more due to certain specifications for newer or more expensive cars. Car parts for certain vehicles may also cost more, so any repairs or fixes to those cars can hit your wallet hard.

Ask a dealer about these costs before you sign a contract. You can also see if the dealer has any warranties that will cover maintenance costs, so you don’t have to take on those higher fees, at least initially.

Additional costs for vehicle options

Prostock-studio/Adobe Happy Black Family Of Three Singing Having Fun Riding Car

It’s nice to pick up a car with additional options, like an upgraded sound system or sunroof. But be cautious about those upgrades and ask the car dealer for a breakout of the costs for each option.

After scanning the costs, you discover that some fancy options are not worth the additional fees. Knowing exactly what you want and what you can live without can help you get a deal on the car you want to drive.

Prices that quietly soar above MSRP


MSRP is the manufacturer’s suggested retail price for how much a dealer should have you pay for a particular car. Today, several market issues are causing demand for new vehicles to outweigh the supply, and dealers may be charging buyers more than MSRP as a result.

Check websites like Kelley Blue Book or Edmunds for car values before you buy. That way, you’ll know if a dealer is trying to price gouge you.

Surprise fees from the dealer

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You might want to set aside some extra cash for surprise fees from the dealer. Some dealers may add a delivery fee or destination fee, as well as a fee for processing your documents as part of the lease or sale. You may even be charged a dealer prep fee.

Some of these fees might not be negotiable. For example, destination fees are notoriously tough to reduce. However, others might be open to bargaining.

Be aware of these fees, and know that you might be able to negotiate them down or possibly have them removed from the final cost of your transaction.

Bottom line

hedgehog94/Adobe Happy beautiful young woman buying a new car at the car showroom

Car buying can be stressful but also rewarding. Research different makes and models that you’re interested in. Then, investigate some of the additional costs you may not have considered, such as fees, taxes, and more. Make sure you do your homework so you can save money on your car insurance.

Doing all that homework can make the process less stressful overall as you focus on the best car for you.

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Author Details

Jenny Cohen Jenny Cohen is a freelance writer who has covered a bit of everything, from finance to sports to her favorite TV shows. Her work has been featured in The Wall Street Journal, USA Today, and FoxSports.com.

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