What are some common car buying fees buy here pay here?
When purchasing a vehicle from a buy here pay here (BHPH) dealership, additional fees may apply to transactions beyond just its purchase price. While these vary between dealerships, these are some typical costs of doing a BHPH deal:
Document Fee: Buy Here Pay Here (BHPH) dealerships often charge a documentation or processing fee in order to cover administrative costs associated with providing all the paperwork for vehicle purchases. This covers costs associated with gathering necessary paperwork prior to making the deal and expediting paperwork submission processes for buyers.
Documentation fees at BHPH dealerships can vary widely, depending on factors like state or local regulations and the exact nature of each dealer. On average, fees at these establishments range between $100-$400.
Title and Registration Fees: Title and registration fees are one of the costs associated with purchasing a vehicle from a buy here pay here (BHPH) dealership, including in cases where it transfers its title into your name and registers it with government authorities.
Title and registration fees depend on the state or local regulations in which a vehicle is being registered; typically these costs range between $50 to over $200.
Before purchasing a BHPH vehicle, it’s wise to inquire about the estimated title and registration fees associated with your location. A dealership should be able to provide this information and breakdown of costs related to these fees.
Sales Tax: Sales taxes are a standard part of vehicle purchases made at buy here pay here (BHPH) dealerships, whether or not financing options are involved. A percentage-based sales tax levied by state and local governments on the purchase price can add additional expenses when financing options are included in a deal.
The sales tax rates can depend on state and local tax regulations where BHPH dealerships are situated, as well as where vehicles will ultimately be registered. Sales taxes usually range between 5% and 10% but could go higher or lower depending on where your dealership operates in an individual jurisdiction.
When purchasing from a BHPH dealership, sales tax is collected and submitted to the appropriate authorities. Your total amount payable depends upon the purchase price before taking into account trade-in credits or down payments.
State-Specific Fees: State-specific fees may be applicable when purchasing a vehicle from a buy here pay here (BHPH) dealership, in addition to other associated costs of purchasing. These charges depend on which state is being purchased from and registered; for instance:
Vehicle Inspection Fee: Prior to registration in some states, vehicle inspection is mandatory and this fee covers its costs; fees vary depending on where your state of registration resides.
Emissions Testing Fee: Some states mandate emissions testing to ensure compliance with environmental regulations, and a fee may be assessed in these instances.
Tire Fee: Some states charge fees associated with tire disposal and recycling programs, typically when purchasing new tires for one’s vehicle. This fee should also be considered when considering purchasing tires as replacement options for existing vehicle tires.
County or Local Taxes/Fees: Additionally to state-level fees, vehicle purchases may incur county or local taxes and fees that impact them as well, such as sales taxes or registration fees specific to your county of purchase. These could include sales tax collection requirements as well as regional charges such as vehicle emissions fees.
Licensing Fee: When purchasing a vehicle from a buy here pay here (BHPH) dealership, licensing fees are often part of the purchase price. These costs cover license plate issuance fees from your state’s department of motor vehicles or another relevant body.
Licensing fees vary based on both your vehicle registration state and DMV regulations; typically these can range anywhere from $25-100+ depending on its jurisdiction.
The BHPH dealership will collect your licensing fee and take care to obtain license plates on your behalf from DMV. They then submit everything needed on your behalf.
Extended Warrant Fee (if Applicable): An Extended Warranty Fee may be added when purchasing from a buy here pay here (BHPH) dealership, to provide extra coverage beyond what’s provided under manufacturer warranties and potentially protect you against unexpected repair costs.
The specific extended warranty fee can differ depending on which BHPH dealership and coverage option you choose, as well as factors like age, make, model and condition of vehicle as well as length and level of protection desired.
Financing Fees (if Applicable): Financing fees are the cost associated with financing through a buy here pay here dealership (BHPH), covering administrative costs and services associated with setting up and managing the financing arrangement for vehicle purchases.
Financing fees at BHPH dealerships vary considerably and depend on factors like dealership policies and terms of financing agreements. Some common fees you might encounter include:
Origination Fee: This fee covers the administrative costs associated with initiating financing process and processing loan application and paperwork.
Loan Processing Fee: Commonly referred to as an application fee, this charge covers reviewing and processing your loan application.
Late Payment Fee: Should you make late payments on your loan, BHPH dealerships may assess a late payment fee as a penalty for this delay.
Before finalizing your BHPH purchase, it’s essential that you review and comprehend all associated fees. Be sure to inquire at your dealership as to their breakdown of all applicable charges as they might pertain specifically to you and your unique circumstances.
Can I negotiate some of the additional costs when buying a car from buy here pay here?
Negotiate the additional costs when buying from a buy here pay here (BHPH) dealership. While negotiations will vary depending on their policies and the type of car dealership chosen, here are a few tips to help negotiate:
Research and Comparison: Before visiting a dealership, do your research on its market value to gain an idea of its costs and fees, so that when the time comes for negotiations this knowledge can give you leverage.
Be Polite and Respectful: Approach negotiations with an approachable and respectful tone, in order to build rapport with dealership staff members and ultimately obtain more favorable terms.
Bundle Fees: As opposed to haggling individual fees separately, try to negotiate one bundled price that includes all associated costs – this may provide more room for negotiations toward securing a lower overall vehicle and associated fee price.
Point Out Competing Offers: If you have received quotes or offers from other BHPH dealerships or lenders, be sure to bring this up during negotiations. Letting the dealership know you have other options can encourage them to be more flexible with their pricing and fees.
Ask for Fee Waivers or Reductions: Make polite inquiries into waiving or reducing certain fees, for instance the documentation or licensing fee. Your dealership may be open to negotiations in order to secure your business.
Emphasize Long-Term Relationship: If your credit history and payment track record are excellent, emphasize their potential for long-term customer relations. This could serve as a negotiation tactic since dealerships want loyal customers.
Negotiation success depends on various factors, including dealership policies, the vehicle you desire and your negotiation skills. Be prepared for compromise and know that not all fees may be negotiable. Before finalizing a purchase agreement or contract it’s essential to carefully read through and understand any agreements or contracts in detail.
Reason why buy here pay here have more fees
Due to various factors, buy here pay here (BHPH) dealerships tend to charge higher fees compared to traditional financing solutions; among these factors are:
Higher Risk Customers: BHPH dealerships frequently work with customers with poor or limited credit histories who present higher lending risks, potentially defaulting payments or encountering financial challenges that require extra fees to offset potential losses. To manage this risk effectively, dealerships impose additional fees to cover potential losses and prevent default.
In-House Financing: BHPH dealerships typically provide in-house financing as an alternative to traditional lenders. By taking on the role of lender themselves and accepting risk associated with financing the vehicle purchase themselves, BHPH dealers tend to pass some of these costs onto customers through various fees and costs associated with managing financing processes themselves.
Limited Financing Solutions: BHPH dealerships typically serve customers who do not qualify for traditional financing due to their credit situation, meaning BHPH dealers typically work with fewer customers and must rely on additional fees as revenue generation sources to sustain themselves and cover potential losses.
Increased Administrative Burden: BHPH dealerships often handle all aspects of purchasing vehicles for customers, from financing paperwork and title transfers through registration. With so much administrative responsibility being assigned to one dealership alone, this can increase operational costs which are then passed onto customers as fees.
Higher Acquisition Costs: BHPH dealerships often acquire vehicles through various sources, including auctions or trade-ins, which means their acquisition costs could be higher compared to traditional dealerships; some of this might even be included as fees in order to facilitate purchasing cars at these outlets.
Note that while BHPH dealerships may charge higher fees, they provide financing solutions to individuals who would otherwise not qualify for traditional financing options. When considering financing through BHPH dealers it’s essential that carefully assess all terms, interest rates and fees associated with financing to make sure it fits with your financial needs and goals.