The Real Cost of Vehicle Ownership

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Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - October 11, 2017

Consumers, especially those with bad credit, need to prepare for the overall costs when purchasing a vehicle. The true cost of car ownership is always more than the selling price.

Financing Considerations

Most people don’t keep enough cash on hand to purchase a vehicle outright, so they look for financing options. When considering an auto loan, it’s important to keep more than the monthly payment in mind.

Interest charges are paid on just about every loan. Several factors determine the interest rate a borrower qualifies for, but a big one is your credit score – a lower score typically means higher interest rates. Other factors include your credit history, the loan term, age of the vehicle, and with subprime loans, the vehicle’s loan-to-value ratio.

A down payment is one way to reduce the overall costs. By effectively lowering the principal, a down payment reduces interest charges over the term of the loan. It can be paid in cash, or covered with trade-in equity, but should ideally equal 20 percent of a vehicle’s price. However, subprime lenders typically accept 10 percent or $1,000, whichever is less.

Additional Fees and Tax

The out-the-door price of a vehicle purchase will always include tax, title, and license fees. These differ in each state and vary with a vehicle’s selling price. Buyers typically pay a state sales tax, and sometimes a county and local tax, while dealers often collect registration, title, and plate costs to save buyers a trip to the DMV. Of course, to cover the cost for preparing and filing this paperwork, they charge a documentation fee that varies by dealer – most states cap the amount dealers can charge here.

Other Costs to Keep in Mind

Buyers also need to consider the everyday costs of a vehicle, including insurance, fuel, and maintenance. Purchasing a reliable vehicle with good fuel economy is a great way to reduce these costs. Also, when considering car choices, keep in mind that vehicle type, make, and model can impact insurance rates.

The Bottom Line

There are a lot of costs to consider when budgeting for a vehicle purchase. For a buyer with bad credit, these costs can make a difference in the outcome of an auto loan. With all this to think about, finding a dealer that can work with you shouldn’t have to weigh on your mind.

CarsDirect wants to lift that burden by matching you with a local special finance dealer who has the lending resources available to work with credit-challenged consumers. Take the first step toward your next vehicle by filling out our no-obligation online auto loan request form today.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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