Tariffs, Taxes, and You: What to Know When Buying a New Car

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While a lot of the hubbub about trade tariffs has settled down, with other political events going on, that doesn’t change the fact that costs are rising almost everywhere. Whether because of inflation, the tariffs, rising costs of materials and labor, those hot ticket items are going up in price, and that includes vehicles of all kinds.

But it doesn’t matter what prices and markets are doing, because sometimes, we don’t have a choice but to purchase new products, well, precisely when we need them. If your car dies, for example, you have to replace it. If you’re in a bad accident, you have to replace it. Especially if you want to get to work on time and to nearby stores and places.

Before you head to the dealership, there are some things you should know. Specifically, some tips that can help you avoid or mitigate some of those price hikes.

What Are Tariffs, Exactly?

In simple terms, tariffs are a dedicated tax on imports, usually charged to companies that are importing goods from other countries. You’ve no doubt read or surmised that the government is placing various tariffs on imports, with imported cars and car parts manufactured outside the United States included.

Pause or no pause for the tariffs, prices are increasing across the board. So, whether the active tariffs drive up the costs of new car prices or not, they’re going up, regardless. Auxiliary costs will also rise, like insurance costs, costs for parts and maintenance, and so on.

How Can I Avoid Paying More for a New Car?

For the most part, you can look into purchasing American-made and sourced vehicles. Most of the tariffs and taxes are applied to foreign or imported vehicles.

Now, that doesn’t mean the prices won’t increase on American-made vehicles, eventually. Some automotive manufacturers are already increasing prices without knowing fully how the tariffs are going to affect their bottom line. And initially, those tariffs may apply only to foreign goods, but they may later include others.

1. Don’t Rush the Purchase, If You Can Help It

If you need a new car right now, nothing can be done. However, if you can buy yourself some time, you can wait for conditions to improve. Search for low loan rates, find well-priced vehicles with a long and reliable life, and use tools like the Consumer Reports Build and Buy Service to find optimal opportunities.

Car prices often follow demand, and right now, tariff anxiety is spurring a higher demand. Per usual market conditions, if you can wait until that demand decreases a little, you’ll find better prices when you head to your local dealerships.

This might seem antithetical, considering that if you wait too long, the tariffs and high prices will kick in. We’re not talking about waiting years. But also, you need to pay attention to the market and be ready to make a move.

2. Look Into Maintenance Costs for the New Vehicle

Depending on the vehicle you’re considering, maintenance costs for service and parts may be inordinate or increasing due to market changes. It’s always a good idea to research and reference this information before purchasing a vehicle. A vehicle may be cheap initially, but those parts prices can be ridiculous. Always check.

You could effectively call them hidden costs because the average person wouldn’t consider these things when selecting a new car, but that doesn’t make them any less important.

3. Stock Up Before Price Hikes

Most maintenance parts, supplies, and tools have yet to be affected by tariffs and other price-related events. Sure, some might have gone up a dollar or two, but the changes have not been significant. So, now’s the perfect time to stock up on items you may need, especially if you have the budget.

A solid place to start is with the must-haves. Oil filters, oil, tools, light bulbs, windshield wipers, and other fluids are necessary. We also recommend getting an OBD2 scanner or car scanner if you don’t already have one. They’re a fantastic way to keep an eye on your vehicle and plan out maintenance, via preventative maintenance measures. You can also find out precisely what’s wrong with your vehicle, new or used, when the check engine light goes on. That’s because they read the computer’s diagnostic trouble codes (DTCs).

4. Consider Bank Loans Versus Dealer Loans

When it comes time to finance that new vehicle, you have several options. Most go with the dealership-approved loans, signing the paperwork at the actual dealer. But you can get a bank loan through select financial institutions, and they’ll often give you approval before you head to the dealership. That has the bonus of informing you how much you’re approved for before you head out to shop.

This is a great option if you’re already a customer or member of a bank or credit union. They offer member-exclusive offers sometimes. But also, they’re more willing to provide favorable terms if they know your financial history.

Finally, Be Flexible

You may have to adjust what type of vehicle you want, make, or model, where you’re purchasing that vehicle, and when. You should also shop around, including visiting other dealerships with the same vehicle(s) and watching private seller options if you’re looking for a used car.

Don’t expect to negotiate huge discounts like you might have been able to in the past. Moreover, be willing to adjust your requirements. You might have to forego a vehicle in a certain color or with a specific trim if the one you want is not available. In other words, keep an open mind and be willing to adapt.

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