If you’re looking for a used car, you’re probably wanting to lower your costs, not add to them. But sometimes, we focus a little too much on the monthly payment and forget to dig deeper into some of the other fees and costs that can impact that number.
Not every fee is avoidable or negotiable, but knowing how they all add up to your final out-the-door price can help you strategize to lower that number even further. In times of economic headwinds and high inflation, every little bit saved helps.
Perhaps the biggest behind-the-scenes finance cost is the interest rate. According to Bankrate, the average interest rate for a 48-month used car loan in July 2026 was 7.45% APR (annual percentage rate). However, this number will depend significantly on your credit score. Credit bureau Experian reported that in Q4 2025, average rates on a used car loan for super prime borrowers (those at the top of the credit-score scale with scores of 781-850) were 7.7%. For those with deep subprime credit scores lower than 500, that rate could grow as high as 21.85%.
Of course, interest rates will depend not only on your credit score, but also on your lender. Financing through a local credit union will almost always get you a better rate than financing through a dealership. Make sure that you are shopping several different lenders for the best rate before you commit.
What Difference Can the Interest Rate on Used Car Loans Make?
Finding the best interest rate on your used car loan can save you a chunk of change over the length of the loan. Using our Car Loan Payment Calculator, you can input a few different interest rates to determine their effect on monthly payments for the exact same vehicle.
Our example car is a 2022 Ford Bronco Sport with a 4-cylinder engine priced at $26,997, which we found among our Cars for Sale. We began with Bankrate’s current average interest rate of 7.45% for a 48-month loan with a 20% down payment of $5,399. So, in our example, we’re financing $21,598.
Loan Option 1: 7% APR — $517 per month for 48 months with a total interest paid of $3,227.
Loan Option 2: 7.45% APR — $522 per month for 48 months with a total interest paid of $3,444.
Loan Option 3: 8% APR — $527 per month for 48 months with a total interest paid of $3,711.
Although there’s only a few dollars’ difference between monthly installments, the extra interest paid does add up.
RELATED ARTICLE: How to Buy a Used Car in 10 Steps
Sales Tax
The car dealer must pay a state sales tax on your vehicle purchase except in:
Delaware
New Hampshire
Montana
Alaska
Oregon
The dealer will pass this to you. This tax varies from state to state, and the rate may differ for vehicles from other commodities. Some local governments tack on a sales tax, as well. Your research should include determining which sales taxes are required.
At 8.25%, Nevada leads the nation in the highest tax rate on cars. Illinois (7.25%) and California (7.25%) follow. Sales tax adds to your bottom-line purchase price and will impact the amount of your loan and the total interest you will pay.
Note on purchasing a vehicle from out of state: Purchasing a vehicle out of state may add even more expense. You should pay the sales tax to the state where you live (if it assesses a vehicle sales tax). However, you may have to purchase a temporary registration in the state where the vehicle is purchased.
Registration and Licensing Fees
Registration and licensing fees vary wildly from one state to the next. Compared to the purchase price of the car itself, those fees probably won’t tack on too much, but don’t forget to wrap them into your budgeting. For example, in Arizona, you can register a car for a whopping $8 flat fee, but the vehicle license tax (VLT) in the state will be based on the car’s estimated value. Generally, a used car’s value is going to be lower than a new car’s, so fees will be lower as well.
Some states calculate fees by weight rather than car value or other factors. In these cases, a full-size pickup truck is likely going to cost a good amount more than a small sedan. Be diligent and understand the fees in your specific state before you make a final purchase.
RELATED ARTICLE: Buying Used vs. Certified Pre-Owned Vehicles
Leasing Fees and Penalties
Leasing is entirely different from financing. Although leasing a used car isn’t all that common outside of certified pre-owned (CPO) purchases, there are used car leases. Our advice on interest rates still applies; however, in leasing terminology, interest is called the money factor and the figure is displayed differently. There will be sales tax and licensing fees, as well.
Leasing contracts have a long list of mandatory and seemingly unwarranted fees that you should aware off. Moreover, as you close out a lease, several potential penalties can add hundreds of dollars to the final bill.
Types of Lease Fees and Penalties
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<div class="fee-num">Fee 1</div>
<div class="fee-name">Acquisition Fee</div>
</div>
</div>
<p class="fee-def">What the lessor charges for setting up the lease. Can include documentation fees, license-plate costs, registration fees, and more.</p>
<div class="fee-tip">
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<span><b>Tip —</b> Not negotiable, but you can fold it into the lease.</span>
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<div class="fee-num">Fee 2</div>
<div class="fee-name">Mileage Penalties</div>
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<p class="fee-def">Vehicle leases will indicate that you must drive less than a specified number of miles, or “allowable mileage.” Each mile over and above that cap will cost you a predetermined per-mile penalty.</p>
<div class="fee-tip">
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<span><b>Tip —</b> May be avoidable by turning the car in early or buying it at lease end.</span>
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<div class="fee-num">Fee 3</div>
<div class="fee-name">Disposition Charge</div>
</div>
</div>
<p class="fee-def">A fee to clean and dispose of your car at the end of the lease.</p>
<div class="fee-tip">
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<span><b>Tip —</b> May be negotiable.</span>
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<div>
<div class="fee-num">Fee 4</div>
<div class="fee-name">Early Termination Fee</div>
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<p class="fee-def">The penalty for breaking a lease contract before its contractual end. This fee can be as much as the total of the lease’s remaining payments.</p>
<div class="fee-tip">
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<span><b>Tip —</b> May be negotiable, but don’t get your hopes up.</span>
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<div class="fee-num">Fee 5</div>
<div class="fee-name">Drive-Off Fees</div>
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<p class="fee-def">Any other required upfront fees — and likely the first month’s lease payment — to begin the lease.</p>
<div class="fee-tip">
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<span><b>Tip —</b> Get these fees itemized. Some dealer paper-shuffling fees may be negotiable.</span>
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<div class="fee-num">Fee 6</div>
<div class="fee-name">Damage Fees</div>
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<p class="fee-def">Penalties for damage beyond anything fitting the lessor’s definition of normal wear and tear.</p>
<div class="fee-tip">
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<span><b>Tip —</b> May be negotiable, but “normal” can be subjective and is ultimately up to the dealer.</span>
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<p>Lease fees and their names vary by dealer and lender. Ask for every charge to be itemized before you sign so you know exactly what you’re paying beyond the vehicle itself.</p>
<span class="ucf-brand">Credit: Lauren Swift</span>
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When you’re buying a used car, take the time to understand how interest rates affect the amount you ultimately pay. Shop around to find the best interest rate you can. When you’re at the dealer, there are some items you can negotiate. Sales tax and licensing fees are set by the state, so you won’t get out of them, but ask for an itemized list of every charge and discuss anything that is negotiable. Dealers want to move used cars, so you may have some wiggle room that can impact your final out-the-door price.
This article has been updated since its original publication. Russ Heaps contributed to this report.
