Hidden Fees and Charges to Watch Out for When Buying a Car from a Bad Credit Car Dealership
2 minutes

When you buy a car with bad credit, it’s important to be aware of all the hidden fees that dealerships can charge. These hidden fees might seem like the cost of doing business, but they can add up quickly and lead you to pay more than what you actually owe on your. Here are the fees you should watch out for.

Dealer holdback fee

Dealer holdback fee is a term that refers to the amount of money that the dealer holds back from the final price of your car, which you pay in addition to the amount you agreed upon with them. The holdback fee can vary from dealer to dealer and can be charged at different stages throughout negotiations. Bad credit car finance dealerships may charge this fee for various reasons, such as:

  • To cover their cost of financing if they offer financing options
  • As an incentive for selling more cars (for example, if there are three people interested in buying one vehicle)
  • To protect themselves against losses related to repossession or late payments

Vehicle registration and title fees

You should be aware that vehicle registration and title fees vary by state. In some areas, these fees are paid by the dealer. In others, they are paid by you. The amount charged is usually a small percentage of the purchase price (around $50 to $150 per car, or more).

If you are buying from an independent used car lot and they don’t offer to pay these costs on your behalf, ensure you have some cash in hand before making any final decisions about what vehicle(s) you want to buy.

Dealer prep charge

A dealer prep charge is a fee that dealers can charge you for preparing the car for sale. It includes things like cleaning and detailing the vehicle, inspecting it for defects, filling up its tank with gas and so on.

You want to ensure the advertised price of your vehicle includes this fee or else you could end up paying more than expected at signing when you purchase it from a bad credit car dealership.

The good news is that there are ways around paying these additional fees. Some dealerships will include them in their advertised prices which means they’re part of your monthly payment. Others may waive them if they know they won’t make any money off them anyway.

Document and recording charges

The dealership or its title agent adds these fees at the time of sale. These fees may include registration, license plate renewal and title processing costs (which can add up quickly).

The amount varies greatly depending on where you live and what state your vehicle was purchased in, but it can be anywhere from $50 up to hundreds of dollars or more.

Buying a car from a bad credit car dealership can be a great way to get back on the road. However, there are some hidden fees and charges that you should know about before making your purchase. It’s important that you do your research so that you know exactly what kind of deal you are getting into when buying from one of these types of dealerships.

Get a free car check

Enter the registration number to check car details instantly

Get a free car check