Car Buying Articles

What New Car Fees Should You Pay?

Fees Chart Reveals Costs Upfront


  • Check the Contract

    Check the Contract

    Don't be caught off-guard by unexpected fees. Plan ahead by using our car-buyer fee chart. | July 30, 2013

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You skillfully negotiate the price of your new car and you think you're getting a darn good deal. But when you see the contract, the total is much higher than what you planned on paying. Then you see the problem: There are fees in the contract you didn't know you had to pay. It leaves you wondering if these new car fees really are legit.

To answer that question, Edmunds.com has created a chart with all the car-buying fees you may encounter. In addition, we show how the different states charge sales tax on trade-ins and rebates. If you've never used the chart before, it's worth reading about the process first. But you also can go directly to the fees chart.

An Overview of the Process
Most commonly, there are three categories of car-buying fees: vehicle registration fees, sales tax and a documentation fee or "doc fee." Joe Magyar, a tax expert from Crowe Horwath LLP who teaches workshops for dealers at National Automobile Dealers Association meetings, says that dealers have a strong incentive to collect taxes correctly. "Because there are so many dollars flowing through the dealership they often get audited," he says.

The following are the main categories of fees charged by dealers.

Vehicle Registration Fees: This is the amount charged by the state to register the new car, assign a title (legal proof of ownership) and cover the cost of license plates. The dealer provides this service for you, saving you a trip to the DMV or registry. Usually, the more expensive the car is, the higher the registry fees.

Sales Tax: Sales tax on a new car amounts to more than most people expect. For example, at 8 percent, sales tax on a $20,000 car will cost you $1,600. Cities and counties frequently add a quarter of a percentage point, so the amount you pay can vary within a state.

Documentation Fees: Dealerships charge car buyers a documentation fee or "doc fee," to cover the cost of preparing and filing the sales contract and other paperwork. In some states, the doc fee is capped by state law. In other states where doc fees are unregulated, dealerships may sell a car at an attractive price but then add a hefty doc fee to the contract. Review the chart below to see how your state handles doc fees. If your state does not cap doc fees, find out early on in the buying process what the dealership charges. If the doc fee is high (anything over $200), negotiate the car's price more aggressively to offset this fee. And keep in mind, as tax expert Magyar points out, that dealers also charge sales tax on the doc fee.

Taxing the Sale
While fees directly affect what you pay, taxes also affect your out-the-door cost. Here is how different states handle the taxes.

Rebates: Customer cash rebates reduce the purchase price of the car. But Magyar says most states charge sales tax on the full purchase amount before the customer cash rebate is applied. For a $25,000 car with a $500 rebate that reduces the sale price to $24,500, you'll pay tax on $25,000. In the chart below, look at the column labeled "Are Incentives Taxed?" If there is a "Y" in this column, it means the sales tax is based on the car's price before rebates.

Trade-In: In many states, if you trade in your old car, you can get a nice tax break. If there is a "Y" in the "Trade-In Sales Tax" column of your state, you are only taxed on the difference between the new car and your trade-in. So, if your new car costs $25,000 and you are getting $10,000 for your trade-in, you will only be taxed on the difference, or $15,000. If sales tax in your state is 10 percent, this will save you $1,000. If there is an "N" in the column, it means that you will pay tax on the full amount of your new car purchase, and the trade-in has no bearing on the sales tax you are charged.

Other Car-Buying Fees
There are two other car-buying fees that frequently arise and that buyers should know about:

Dealer Fees: Some dealers write other fees into the contract and give them official-sounding names: "S&H" or "Dealer Prep" or even "Shipping." Find out early what fees you will be charged and negotiate accordingly. Before you sign the contract, ensure that no additional dealer fees have been added.

Advertising Fees: Sometimes buyers look up invoice prices on Edmunds and find they don't match the invoice price given by a dealer. What's going on? There is probably an advertising fee attached to the invoice price of the car. If the car's invoice lists an advertising fee, this is an actual charge made by the manufacturer to the dealer and you should pay it. However, some dealers will add an unofficial advertising fee into the sales contract, perhaps claiming they are offsetting the cost of their own advertising efforts. If you encounter this dealer-added advertising fee, you can challenge it or negotiate a lower purchase price on the car to offset the additional charge.

While this chart helps estimate fees, don't expect to calculate your final cost to the penny. Registry fees, in particular, are tricky, but the DMV Web site in many states has a calculator for this purpose. Additionally, many states have nominal charges (less than $40) for local environmental laws. Still, this chart will tell you roughly what to expect and help you budget accordingly. Finally, doc fees and sales taxes change frequently. Edmunds.com updates this information as it is made available. Let us know if you come upon any changes.

State Maximum
Sales Tax (%)1
Average DMV Fees Trade-In
Sales Tax?2
Are Rebates
Taxed?3
Doc Fee4
Alabama 13.50 $469 Y Y No limit
Alaska 7.50 $100 Y N No limit
Arizona 10.73 $532 Y N No limit
Arkansas 12.00 $32 Y Y No limit
California 10.00 $244 N Y $80
Colorado 10.40 $533 Y Y No limit
Connecticut 6.35 $87 Y Y No limit
Delaware 0.00 $884 Y N No limit
District of Columbia 5.75 $497 N Y No limit
Florida 7.50 $181 Y Y No limit
Georgia 8.00 $38 Y Y No limit
Hawaii 4.50 $108 N Y No limit
Idaho 9.00 $92 Y Y No limit
Illinois 10.50 $99 Y Y $166
Indiana 7.00 $40 Y Y No limit
Iowa 7.00 $354 Y N No limit
Kansas 10.40 $39 Y N No limit
Kentucky 6.00 $21 N N No limit
Louisiana 11.00 $49 Y N $200
Maine 5.50 $35 Y Y No limit
Maryland 6.00 $105 N Y $300
Massachusetts 6.25 $80 Y N No limit
Michigan 6.00 $230 N Y  $190 or 5% of sale price, whichever is less
Minnesota 7.88 $388 Y N $75
Mississippi 8.00 $25 Y Y No limit
Missouri 10.73 $63 Y N No Limit
Montana 0.00 $519 N N No limit
Nebraska 7.50 $67 Y N No limit
Nevada 8.10 $33 Y Y No limit
New Hampshire 0.00 $60 Y N No limit
New Jersey 7.00 $93 Y Y No limit
New Mexico 8.69 $45 Y Y No limit
New York 8.88 $74 Y Y $75
North Carolina 7.50 $28 Y Y No limit
North Dakota 8.00 $70 Y Y No limit
Ohio 8.00 $48 Y Y  $250 or 10% of price, whichever is less
Oklahoma 11.00 $102 Y N No limit
Oregon 0.00 $86 Y N $75 or $100 if filed electronically
Pennsylvania 8.00 $36 Y N No limit
Rhode Island 7.00 $32 Y N No limit
South Carolina 8.50 $39 Y Y No limit
South Dakota 6.00 $48 Y Y No limit
Tennessee 9.75 $24 Y Y No limit
Texas 8.25 $85 Y N No limit
Utah 8.35 $154 Y N No limit
Vermont 7.00 $70 Y N No limit
Virginia 6.00 $31 N Y No limit
Washington 9.60 $57 Y Y $150
West Virginia 7.00 $30 Y Y No limit
Wisconsin 5.60 $75 Y Y No limit
Wyoming 6.00 $572 Y N No limit

1. Maximum Sales Tax
Often, you pay a combination of state, county and local taxes. This is the maximum tax you could be charged.

2. Trade-In Sales Tax
If there is a "Y" in this column it means that you will pay sales tax only on the difference between your new car purchase and the value of your trade-in, saving you money. If there is an "N" in the column, it means that you will pay tax on the full amount of your new car purchase.

3. Are Incentives Taxed?
A "Y" in this column means that the buyer will pay tax on the purchase price before the manufacturer rebate is applied.

4. Documentation Fee
This will tell you if the documentation fee is regulated by the state and the maximum allowed amount.

Comments

  • pnwson_ pnwson_ Posts:

    A few months ago I read an online article that contained a list of tips to help people buy a used car. One of the tips was to be wary of "doc fees" that can get added to the price of a vehicle. Now it's a couple months later, and after exhaustive research and a couple of casual forays out looking at cars, I went out tonight to test drive a car that I really felt would be the car for me. The test drive went fine; the car was really tight, everything seemed to work. It was a used car with 86,000 miles at a major brand dealer. So we went inside after I indicated my interest in buying it. That's when I was told that in addition to the advertised price, there was a $499 doc fee. This on a six year-old vehicle. My jaw literally fell open, and I flatly refused to pay it. I actually felt insulted that they would even try to make me. Now if I were buying the latest "must have" brand new car like a Chevy Cruze or Ford Focus then sure, I would probably be stuck paying it. But I did have options, namely all the private party sellers in addition to hundreds of small-name used car lots. THEY hopefully wouldn't be foolish enough to stick me with such a ridiculous fee. The end result was that I got them to drop the base price (because just like this article states, they refuse to drop the doc fee) to eliminate the effect of the doc fee, plus another couple hundred dollars. It was all I had been looking for in the first place, but it felt like I had to pull someone's teeth out to get it.

  • mzzda mzzda Posts:

    In New York the doc fees have gone up to $75 as of 06/23/11. I confirmed this with the DMV and Atty General's office after Bay Ridge Nissan illegally tried to add a doc fee of $398 on top of the sale price. Call the DMV, they'll tell you they've had issues with this dealer. I'm posting a full review as well.

  • Average registry fees charged in Nebraska are $86? I don't think so! With the wheel tax and all the other crap Nebraska adds, I have never paid less than $150 to register my 1998 Chevy Malibu, and my 2009 Elantra cost well over $250.

  • Did pwnson say the Chevy Cruze or Ford Focus was a "must have" car? LOL!

  • fresco1 fresco1 Posts:

    FYI: Texas's auto sales tax is 6.25%

  • zeke108 zeke108 Posts:

    I was told that there was a $500 delivery fee on a used car at a dealership even though the car is on the lot. Is this legit?

  • hms3683 hms3683 Posts:

    In Illinois, and maybe elsewhere, dealers may try to include "Vin etch" for around $300. This happened to me at Golf Mill Ford. This comes with their "final price," which they ask customers to accept as a package. It is really a specialized insurance for car recovery in the event of theft. You may already have it. But, with it appearing in the set of fees that you have to sign, you could be pulled into buying this. Unless you are buying a car that is in a category of likely auto theft models, chances that your car will be stolen are pretty slim. Chances that it will be stolen and not recovered are slimmer. You probably do not need this insurance.

  • cheryl2 cheryl2 Posts:

    I found a car out of state. How would that be handled?

  • tbooster tbooster Posts:

    Should I be paying Documentation fee when I paid cash for the vehicle? Exactly what service(s) those finnacial people did for me other than them wasting my time trying to get me to buy things I don't want? Most dealerships do have some really hot chicks to do those types of job.

  • iamacat2 iamacat2 Posts:

    Oklahoma doesn't charge sales tax per se, it's an excise tax that is 3.25%.

  • igozoomzoom igozoomzoom Posts:

    Effective 03/01/2013, Georgia no longer charges Sales Tax on Vehicle Sales. Instead, a new Title Ad Valorem Tax (TAVT) is charged at the time of of sale (6.5% in 2013, 6.75% in 2014, 7% in 2015).

  • lisal321 lisal321 Posts:

    Hello everyone! I am desperate for answers on this one. The new GA TAVT law is really vague when it comes to leases! My Hyundai lease was scheduled to expire this month, so I decided to lease a new Mazda and trade in the Hyundai. Last Friday, I traded it in to a local Mazda dealership with the understanding that the trade would reduce the amount of TAVT tax I'd owe for the new Mazda I'd be leasing (I calculated it on DOR's website using the vin numbers). However, the sales rep informed me that I was not going to get a Trade In reduction because I was trading in a lease and had not paid any sales tax on the vehicle. So they told me that they'd subtract the $1600 credit from the $1845 I owed in TAVT taxes, and the remaining $245 would be rolled in to my lease payments. A part of me feels like they might be trying to take advantage of me. They seem to be treating it like a turn in and not a trade in.

  • carguy7265 carguy7265 Posts:

    I believe that these doc fees are getting out of control I could be ok with maybe 250.00 cap but in Va Ive seen them as high as 999.00 now that is getting out of control and then people complain about regulations but it's taking advantage of consumers on that level is what brings attention to dealers as it should when they go that far

  • carguy7265 carguy7265 Posts:

    And that etch is BS too I sold new and used cars in Va dealer cost for etch was 20.00 and Then the idiots in prep would install them crooked and look like crap on your windows and it can't be removed

  • How can Edmunds have an article on new car fees and not include mention of "destination fees"? Edmunds builds the destination fee into its "TMV" yet this article does not even mention it. Are we to assume that buyers must pay this fee in full? Or not? This doublespeak seems downright disingenuous to me and I had trusted Edmunds as a source for objective car buying information but now I am not so sure.

  • whatfuture whatfuture Posts:

    Super article. I'm in Asheville, NC. We've purchased three cars in the last 8 months. The first from a dealer in Hickory, NC. They said everyone charges a documentation fee. I placed a call to the same brand dealership (they sell used cars and have the same name) elsewhere in NC and that dealer didn't have a fee. That used car was recently sold for a new car. There were documentation fees at both dealerships we went to. What bothers me the most is one dealership added a pre delivery and post inspection under "dealer ad-ons" with other items and that came to $1900. The individual item costs weren't listed. I talked to the sales manager today about that particular list and asked why those items were on the list - I'm a senior (just hitting that milestone) - and have never seen it. He explained it but it was fluff to me - like the can of tire inflator that's given to many these days instead of a spare donut. I come from NY and never saw any of these ridiculous fees. I'm sure we were had. (Well, I was - I was sold an AWD used car - written on the invoice from a dealership, had it inspected at my mechanic and later learned it was a FWD... BBB, no one could do anything about it.) NC will likely never do away with these fees and dealerships are scrambling to make money. A doc fee is a way of getting it. I don't expect to come out of this recession (call it what you want). As that happens strange things pop up. This is one of them.

  • whatfuture whatfuture Posts:

    Super article. I'm in Asheville, NC. We've purchased three cars in the last 8 months. The first from a dealer in Hickory, NC. They said everyone charges a documentation fee. I placed a call to the same brand dealership (they sell used cars and have the same name) elsewhere in NC and that dealer didn't have a fee. That used car was recently sold for a new car. There were documentation fees at both dealerships we went to. What bothers me the most is one dealership added a pre delivery and post inspection under "dealer ad-ons" with other items and that came to $1900. The individual item costs weren't listed. I talked to the sales manager today about that particular list and asked why those items were on the list - I'm a senior (just hitting that milestone) - and have never seen it. He explained it but it was fluff to me - like the can of tire inflator that's given to many these days instead of a spare donut. I come from NY and never saw any of these ridiculous fees. I'm sure we were had. (Well, I was - I was sold an AWD used car - written on the invoice from a dealership, had it inspected at my mechanic and later learned it was a FWD... BBB, no one could do anything about it.) NC will likely never do away with these fees and dealerships are scrambling to make money. A doc fee is a way of getting it. I don't expect to come out of this recession (call it what you want). As that happens strange things pop up. This is one of them.

  • triplesec triplesec Posts:

    Make sure you know in advance what Rebates are being offered. These typically originate from the Manufacturer and NOT the dealer .. but the dealer would like you to think they were being generous when you would be receiving the discount regardless. Another thing to be cautious of is the dealer adding the Tax, Doc Fees and other Fees into the loan. It would always be best for the buyer to pay those fees in cash, in comparison to adding them to the total loan and thereby paying (with interest) over the entire loan term.

  • triplesec triplesec Posts:

    It's always a good idea to shop around for a loan in advance of talking with the Dealer's finance (snake-oil) sales team. Dealers have been known to obtain a rate from one of their affiliated banks and then mark it up 1% and pocket the difference. Know your credit score and obtain a pre-approval for a loan. This is easy to do, since all you need is a ballpark amount which can be obtained with some time and research.

  • penn_buyer penn_buyer Posts:

    Is it possible to get official document about "are incentives taxed" for Pennsylvania. The link takes to Penn Dot and I could not find it on PennDot. I need it to show a dealer.

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