What does drive-off cost mean when buying a car?

This is part of our Car Buyer Glossary series that breaks all the prerequisites for knowing whether you are buying a new or used car from a dealership.

If you finance a car purchase, there are three levels of payment: initial, long-term and total. The initial payment is made at the dealership on the day of purchase of the car. Long-term payments are usually a monthly rate that can last several months, often years. The total cost is every dollar spent on buying a car over time, including initial, monthly, and interest. The initial payment is often referred to as the drive-off price in the car purchase process.

Although the drive-off price is basically a one-time payment, it consists of a number of costs. This includes down payment, documentation fees, sales tax, title and registration fees, destination / delivery charges and occasionally other dealer-specific fees.

Is there a charge for drive-off costs?

When financing the purchase of a car, a down payment is a large sum of money that goes towards the purchase price of the car. In most cases, the larger the up-front down payment, the lower the monthly payment and the better the financing options. Beware of places that offer deals without any down payment, as such financing is usually to trap customers with extremely high monthly rates and high interest rates. In the long run the price of the car will be much higher.

Documentation fees can range from hundreds of dollars and are meant to cover the costs of the dealer processing the transaction. Taxes are self-explanatory and determined by local and state tax rates. The title and registration fee comes courtesy of the local department of motor vehicles. Destination / delivery charges are not negotiable and can be easily researched before purchase – some publications will automatically add this
Manufacturer’s Recommended Retail Price (MSRP). This is a fee that is sent to the dealer to recover the cost of sending the vehicle and to the customer.

Depending on the car and down payment, drive-off can range from hundreds to thousands of dollars.

What about lease?

This is slightly different if the transaction is for a lease rather than a purchase. The final drive-off for a lease usually includes down payment, first month payment, documentation fee, acquisition fee, sales tax and title. Of course, it costs to borrow a car for a certain period of time, not to take ownership.

How do you find out the cost of drive stop?

Asking the seller for a drive-off price, also known as “total arrears when signing up” or “door costs”, is the best way to make sure you know exactly how much you will pay. A negotiation can determine how much you pay relative to MSRP, but before adding these various drive-off costs. It will force the dealer to tell you exactly how much you are paying on the day of purchase.

This article is written by Tony Markovich

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