Where to Spot the Hidden Fees in Your Car Loan


When you buy a new car, you expect to see certain fees. In addition to monthly payments, you plan for things like insurance, registration, and annual servicing costs. But, what about the hidden fees included in a car loan; the ones dealerships don’t tell you about?

To factor hidden fees into a car budget, you first need to know what you’re looking for. Let us help! Here’s the low-down on the undercover costs of a car loan and what to expect when you apply.

When you secure an auto loan, always make sure to ask if there is a penalty associated with paying down your loan early, otherwise known as a prepayment penalty.

It’s common practice for dealers to include a clause in your contract that says you must pay a certain amount of money if you decide to put extra towards your car loan, in addition to your monthly payments.

You can either negotiate the terms of the penalty with your salesperson, or request it be removed altogether. That way, if you do come into some extra cash, you can pay your car loan off earlier without a problem!

When you secure an auto loan, you’re dedicating a certain portion of your income to a vehicle for an extended period of time. This inevitably means you’ll have less money to spend on other things. Understanding the limitations a car loan may put on your social life is an important first step to take before applying.

You might be saving for your first home, or maybe you’re putting money away for retirement. Whatever the reason, make sure you have enough money to achieve your financial goals and still get a car loan. Or at least understand that a loan may slow your progress.

An extended warranty is designed to cover any repair costs that go beyond a manufacturer’s warranty. Typically, an extended warranty kicks in after the expiration day of the manufacturer’s bumper-to-bumper warranty and can be purchased through the dealership.

Extended vehicle warranties are an especially good idea if you’re purchasing a previously owned vehicle. By offsetting the cost of unexpected repairs, it takes the uncertainty out of buying used.

If you decide to purchase an extended warranty, you can either include the cost with your monthly payments or pay for it with cash. Paying with cash means you don’t pay interest on the warranty, so it’s the best financial choice of the two.

Many dealers hide fees into the cost of their vehicles. These costs can go by a variety of names – administration fees and documentation fees are usually the killers – and can range in price. While the Alberta Motor Vehicle Industry Council monitors our province’s auto industry to ensure consumers are treated fairly, it’s still important to protect yourself against shady practices. This includes hidden dealer fees.

While admin fees are common practice, you should be made aware of them and how much they cost before you buy. We us, we believe in fully transparent pricing. There are no hidden fees or costs associated with any of our vehicles. What you see is what you get, plus GST.

Administration and documentation fees can easily cost you up to $1000. Ask questions before you buy!

Sales tax rates differ widely across Canada. When you buy a car in Alberta, dealer, federal goods and services tax apply and GST is charged at a rate of 5 percent.

If you live in British Columbia, you need to also account for a Provincial Sales Tax (PST) which is charged at a rate of seven percent for vehicles less than $55,000. PST increases by 1 percent for each additional $1,000, up to a maximum of 10 percent for vehicles above $57,000.

We have experience dealing with all types of financial situations.

We have one of the largest vehicle selections in Western Canada.