What Are Added to Used Car Price?

Used cars do not have a factory invoice, so there is no fixed rate when it comes to the pricing of these cars. The car dealer creates a probable price that we have to hover over. In the current used car market, it is quite easy to check a car’s price using various software and websites. Whether you are buying a new or used car, it is important to know what is added to the car’s price. Unlike a new car, the price of a used car is quite unpredictable.

The dealers are free to choose a price for a car based on the expenses they had to cover when acquiring and then later in fixing up the car. Most dealers have to do some repairs before they can put the cars on the lot for sale. They are doing business as well, and they, too, need to make a profit. It is up to the customer to read the contract thoroughly and avoid any unnecessary clauses and elements of the deal to save money.

How Used Car Prices Are Determined

Used car buyers need to go through a lot of negotiating to buy a car at a good price. That is because there is no fixed price for used cars on the lot. Each car has different mileage, make, model, and condition. So even similar-looking cars are different in cost. Used car values depend on what the dealer paid to buy the car. So there are a few things that must be considered in determining the price before buying a used car:

• The mileage incurred on the car.
• Condition of the car
• Factory Invoice and trim levels
• Reconditioning cost
• Demand and popularity
• The current market
• Vehicle acquisition issues

What is a Dealer Fee?

Car dealers often push to sell used vehicles as they have a greater chance of making money off of them than selling a new car. That is because of the addition of dealer fees to the used car prices. Dealer fee includes contents like fees to be paid to the government and state as well as fees to be added towards the dealership’s profit. About 8% to 10% of the car’s total price is filled up by dealer fees.

Profit is not always the main goal of a seller. In fact, most of the time, the main goal is to sell the vehicles as fast as possible. So there is no fixed value of the used car because of the ever-changing dealer fees. Each dealer may choose a different rate of dealer fees. If a dealer sells cars fast, the used car sold there would have fewer dealer fees. But the same is also true for a dealer who cannot complete the sale of the inventory easily. They might include a higher level of dealer fees.

Expenses Added to Used Car Prices

Whether you trade in your old car or get a car loan to buy a car, a simple reduction in some avoidable prices that are added to the price can lower your cost by a big margin. Car shoppers need to know what type of added costs are being incorporated into the car’s price without their knowledge.

Documentation Fees

Documentation is the biggest part of any business transaction. The dealer of the vehicle will charge you the cost of preparing the document and filling in the paperwork. The dealer fees are different in each state, and the same goes for doc fees. California caps the fee at a limit of $85, whereas the fee in Florida is $895 on average.

Inspection and Licensing Fees

In the case of used cars, the cars need to go through a series of inspections by government-approved personnel. In many states, it is mandatory to check the vehicle’s safety and emission rate. This cost is dumped on the customer by the dealers. It can range from $7 to $40. And the fees for tax, licensing, and titles are also added to the customer tab. Based on the state you live in, the cost is different.

Reconditioning Fees

Reconditioning a used vehicle means taking care of any faulty parts of the vehicle before selling. That means doing various mechanical repairs, cleaning, oil changes, tough-ups to the body, redoing paint jobs, refurbishing the upholstery, etc. These costs are added to the price of the vehicle. The reconditioning fees are mandatory but can be lowered to a minimum cost by thorough negotiations.

Car Pack

Pack fees on a used car mean the added cost of about $200 to $750 charged to the customers as a fee for the dealers’ daily operations behind the vehicles. As a business, the used car sellers need to make a profit on the costs they have incurred on a certain car. So when the sale of the car is near, these costs need to be added to get the premium price.

Some Dealer Fees Can Be Avoided

These days, technology and various online platforms help the customer understand vehicle prices and know what the cost of the car should be. So they always try to avoid some dealer fees that are not absolutely mandatory. The negotiation process has become more focused and cutthroat.

Insurance Fees

Dealers are often eager to provide you with a cushion for any insurance problems. When buying the car in installments, dealers often provide load protection insurance at the cost of a small but significant fee for any case if you fail to pay the installments. This can be easily ensured by your bank or credit union, saving you from the unnecessary extra fee.

Tire and Wheel Protection Fees

Many dealers have policies where that offer to fix any problems or accidents with the car’s tire and wheels in the future. The fee is quite expensive as the tires and wheels of a car are very expensive. But the cost of the yearly policy is often higher than the average price of all the wheel repairs and changes per annum, making the policy just a waste of money.

Extended Warranty

An extended warranty is a security idea for the period after the main warranty time limit is over. This is very lucrative, but the problem is that the dealer is not always the provider of the warranty, and so the service is not satisfactory most of the time. You can make sure that the providing company is good and then choose to invest in an extended warranty.

Appearance Packs

We want our second-hand cars to look like new cars. The dealers try to exploit this wish and charge extra for any and all types of beautification and customized changes to the looks of the car. Some dealers offer to engrave the VIN to the car’s window or body, and some offer customized rims for the wheels. If you do not need these, you can easily say no to them.

Estimate Used Car Prices Successfully

According to experienced sellers, the way of selling cars has changed in recent days. Back then, dealers would state a price at a profit estimated up to $5000. When the buyer chooses a car to buy, they could negotiate the price, and the price could be agreed on at around $2000 to $2500. This was what they called a win-win situation, where the buyer was happy to have lowered the cost through negotiations, and the dealers were happy to have made a good profit.

There are a lot of platforms these days to check the price of a car after putting in some basic information. These sites are able to judge the car’s worth just by the car’s type, make, year, model, and current condition. As used cars do not possess a direct factory invoice, these platforms are the next best thing. To buy a car at the best possible price, it is mandatory to check the car’s potential worth before going into the dealership to buy the car.

Conclusion

Because of the unawareness of customers, they are easily paying too much price for a car, or they refrain from buying a car, thinking the car is out of their price range. That is why everyone should be well versed on the added prices on the actual price of a car. The car prices can be lowered with some negotiations. But if you avoid unnecessary and avoidable dealer fees, you can make a good deal out of a used vehicle.

Used cars are becoming the go-to choice of most people these days, so the price of the vehicles is becoming greatly affected. Dealers pay more attention to the inventory turns, so the oldest car in the lot becomes the cheapest as it has the least amount of added fees. As a customer, you need to figure out the perfect combination of a good quality car and the least added dealer fees to buy a used car. You can read more about topics like this for more money-making tips.