There is no question car dealers are experts at “nickel-and-diming” you to death with additional fees and charges when it comes to buying a new car. However, depending on the region you live in, there are legitimate state and regional fees required by law. These fees vary from state to state, some can be negotiated and some are your responsibility to pay.
All dealers have one, the charge is meant to cover the cost of office personnel doing the paperwork after the sale of a new or used car. Most reputable car dealerships charge anywhere from $50 to $500 and the fee is normally not brought to your attention until right before you sign the paperwork for your vehicle. Documentation fees (or doc fees) vary from state to state and some states have a maximum limit a dealer is allowed to charge. The lowest average is $75 in New York, with the highest average being charged in Florida at $670.
More about documentary fees
Additional charges in the form of fees are a very scratchy topic because you’ve done your homework, negotiated the best possible deal, and when signing your paperwork there’s a higher price than agreed upon.
A doc fee of $500 can raise your monthly payment by approximately $10 a month depending on your loan term and interest rate.
Some dealers will negotiate this additional charge with you, if you find one that will remove the fee, they will most likely discount the car the same amount as the fee and leave the doc fee on the paperwork.
You will find a doc fee on your paperwork if you buy a used car as well.
Every vehicle sold in a dealership will have a doc fee included.
How to Buy a New Car Online – Not sure where to start? My step-by-step guide on how to buy a new car online.
State vehicle registration fees
Vehicle Registration – The amount the state charges to register a new car, this also covers title assignment and the cost of license plates. After you’ve purchased the vehicle, the dealership saves you a trip to the Department of Motor Vehicles or Registry by providing this service for you.
The vehicle registration fee will vary depending on the price of the vehicle, normally the more expensive the vehicle, the higher the registration fee will be. These charges are not normally negotiable with the dealer, however, sometimes a dealer may have a sale or special where they will throw in the registration fee. They may treat it as the doc fee, they’ll leave it on the paperwork and discount the price of the vehicle an equal amount.
Sales tax on a vehicle can be very expensive, some states will allow you to finance your tax, title, registration, and others will make you pay it at a later time at the DMV, registry, or tag agency. Many dealers are very “hush-hush” about taxes in states that require you to pay for it out of your pocket during or after the sale.
The dealer knows once you sign the contract the vehicle is yours and they don’t want to risk losing a deal because you’re worried about paying the taxes on the vehicle. For example, sales tax on a $28,000 vehicle at 7 percent would be $1,960. Most counties and cities will add a quarter percent, so the amounts may vary within different areas within your state.
Where are more tips about taxes?
My advice is to NOT roll your TT&L (tax, title, and license) into your car loan. You will end up paying more in interest if you do. Include the TT&L amount on top of your 15-20% cash-down payment. This will save you money and help you pay the vehicle off much faster.
Tax charges also vary from state to state, some states will charge taxes on the total price of the vehicle and some will only charge tax on the trade difference (the amount leftover from purchase price minus your trade amount).
All car dealers are required to participate in regional advertising to promote the dealers within their region. This is how manufacturers pay for those really nice and flashy car dealer ads you see on national television that invite you to visit your local area dealer. Advertising is a huge part of a dealership’s budget, amounts can vary per region and can run anywhere between $250 to $400 or more. The rule is you’re responsible for the advertising fee and most dealers will not negotiate the amount, but you never know how bad a dealer wants to move a vehicle so I’d at least make a run at them.
More tips about advertising fees.
Some manufacturers, like Honda, build the fee into the factory invoice price. Others, such as Toyota, may list the charge as a separate line item and disguise it with initials like TDA (Toyota Dealer Advertising Fee) or FDAF (Ford Dealer Advertising Fund).
One thing to watch for is unethical dealers trying to pass off their in-house advertising fees by listing them on the purchase order also. Keep in mind, regional advertising fees are separate from the expenses dealers incur from advertising their own vehicles, and the expense of in-house advertising is not charged to the consumer as a separate fee.
You will want to proceed with caution when an advertising fee is not listed on the invoice but the dealer is including it within the final price of the vehicle. They may be attempting to double-dip you for the fee or stick you with some other BS fee.
An easy way to figure out if an advertising fee is legit is to call other same brand dealers in the same region and ask them how much the fee is on the car you’re wanting to buy.
Some states will give you a nice little tax break when you trade in your old car. They do this by only taxing you on the “trade difference.” This is the balance after subtracting the amount you received from your trade-in.
This is how it works:
$28,000 (New Car Price) – $10,000 (Trade-in Amount) = $18,000 (Taxable Trade Difference / Pay Tax on This Amount)
Your trade difference of $18,000 is the amount you will pay taxes on. If you see a “P” in the chart below, this is how your state handles taxes. If your state has a “T” in the tax column, your trade has no bearing on the transaction and you must pay sales tax on the full amount of your new car purchase.
$28,000 (New Car Price / Pay Tax on This Amount) – $10,000 (Trade-in Amount)
= $18,000 (Trade Difference)
Some of the biggest types of discounts you may run across when purchasing a new car are customer rebates and incentives. These types of discounts reduce the purchase price of the vehicle.
Most states charge sales tax on the full purchase price of the vehicle BEFORE the rebate is applied to discount the vehicle. For example, a $28,000 car that has a $1,500 cash rebate reduces the vehicle’s sales price to $26,500. However, you’ll still pay sales tax on the original purchase price of $28,000.
There are some states that charge sales tax after the rebate is applied. In the car dealer fee chart above, in the “Are Rebates Taxed?” column, if there is a “Y” in the column, it means sales tax is calculated on the vehicle’s purchase price before the incentive is applied.
Recommended New Car Shopping Sites
RydeShopper has one of the largest new car dealership networks in the world. Select the make and model you’re interested in and they will instantly search clearance pricing within your local area. Don’t forget to select as many dealers as possible to increase your chances for the greatest discounts and savings.
Edmunds is one of the oldest and best new car research and review sites on the internet. Their huge dealer network allows you to shop, research and compare millions of new cars so you can find the exact vehicle you're looking for.
MotorTrend is one of the best kept secrets on the Internet. Best known for their automobile magazine, MotorTrend has a vast dealer network across the nation. Their referral service is 100% free and there’s no obligation to purchase. Just pick the vehicle you’re interested in, select local dealers, and receive discount pricing.
CarsDirect has been in online vehicle research business since 1998 and has all the right tools to help you find your next car, truck or SUV. They offer a no-hassle experience from configuring a car to making the final purchase. You’ll find your next car quickly and easily.
The chart below will not allow you to calculate an exact vehicle cost. It will help you get a good idea of what you will pay. Registry fees are tricky to calculate, you can visit your states’ Department of Motor Vehicles (DMV) website and use their calculator. Most states also have minor charges (less than $50) for environmental laws. Documentation fees change frequently, I do my best to keep the chart updated. If you know of any updates please let me know and I will make the necessary changes.
I’ve added this handy car dealer fee chart to help you see the estimated average documentation fees (doc fees) charged by dealers in each state. Use caution with states that don’t have a maximum limit, unscrupulous dealers can mark up the doc fee as high as they want to scam an unsuspecting buyer. You can use it to determine if the dealer you’re buying a car from is charging close to the average of what other dealers are charging in the area.
2021 New car dealer fee & tax chart
State
Max sales tax
Ave DMV fees
Trade-In tax credit?
Rebates taxed?
Doc fee limits
Ave doc fee
Alabama
11%
$363
P
Y
No Max
$499
Alaska
7.50%
$100
P
N
No Max
$200
Arizona
11.20%
$532
P
N
No Max
$429
Arkansas
11.25%
$34
P
Y
$129
$129
California
10.25%
$296
T
Y
$80
$80
Colorado
11.20%
$598
P
Y
No Max
$598
Connecticut
6.35%
$107
P
Y
No Max
$499
Delaware
0%
$1,553
P
N
No Max
$292
District of Columbia
5.75%
$124
T
Y
No Max
$300
Florida
8%
$294
P
Y
No Max
$799
Georgia
8.90%
$2,465
P
Y
No Max
$599
Hawaii
4.7120%
$108
T
Y
No Max
$245
Idaho
9%
$62
P
Y
No Max
$299
Illinois
11%
$196
P
Y
$169
$169
Indiana
7%
$21
P
Y
No Max
$198
Iowa
7%
$365
P
N
$180
$180
Kansas
10.60%
$47
P
N
No Max
$399
Kentucky
6%
$21
T
N
No Max
$450
Louisiana
11.45%
$138
P
N
$200
$200
Maine
5.50%
$873
P
Y
No Max
$499
Maryland
6%
$258
T
Y
$500
$495
Massachusetts
6.25%
$135
P
N
No Max
$395
Michigan
6%
$259
T
Y
$210 or 5% of price, whichever is less
$210
Minnesota
8.38%
$464
P
N
$75
$75
Mississippi
8%
$39
P
Y
No Max
$260
Missouri
10.10%
$45
P
N
$199.99
$199
Montana
0%
$577
T
N
No Max
$299
Nebraska
7.50%
$571
P
N
No Max
$299
Nevada
8.27%
$550
P
Y
No Max
$499
New Hampshire
0%
$60
P
N
No Max
$372
New Jersey
6.63%
$133
P
Y
No Max
$399
New Mexico
9.06%
$65
P
Y
No Max
$339
New York
8.88%
$86
P
Y
$75
$75
North Carolina
3.00%
$88
P
Y
No Max
$599
North Dakota
8.50%
$103
P
Y
No Max
$299
Ohio
8%
$39
P
Y
$250 or 10% of price, whichever is less
$250
Oklahoma
11.50%
$107
P
N
No limit
$299
Oregon
0%
$187
P
N
$115 or $150 if filed electronically
$75
Pennsylvania
7%
$87
P
N
$113 or $134 if filed electronically
$134
Rhode Island
7%
$32
P
N
$200
$220
South Carolina
9%
$39
P
Y
No Max
$350
South Dakota
6.50%
$48
P
Y
No Max
$129
Tennessee
10%
$35
P
Y
No Max
$500
Texas
8.25%
$94
P
N
No Max
$150
Utah
8.60%
$154
P
N
No Max
$299
Vermont
7%
$70
P
N
No Max
$180
Virginia
7%
$53
T
Y
No Max
$599
Washington
10.40%
$57
P
Y
$150
$150
West Virginia
7%
$40
P
Y
$175
$175
Wisconsin
5.60%
$145
P
Y
No Max
$229
Wyoming
6%
$659
P
N
No Max
$500
State table column definitions.
Max sales tax: In most states, you may pay a combination of state, county, and local taxes. Keep in mind, this is the MAXIMUM tax you could be charged in each state.
Ave DMV fees: These amounts are the approximate amount it will cost you to register your new vehicle within the state you currently reside in.
Trade-In tax: If there is a “T” in the column, it means you will pay to take on the full amount of your new car purchase price. If there is a “P” in this column it means you will only pay sales tax on the trade difference ( the difference between your new car purchase and the value of your trade-in), saving you money.
Rebates taxed?: A “Y” in this column means that the buyer will pay tax on the purchase price before the manufacturer cash rebate is applied.
Doc fee limits: This will tell you if the documentation fee is regulated by the state and the maximum amount allowed by state law.
Ave doc fee: The typical amount you can expect to pay for a dealer doc fee per state.
Car Buying Tip – State fees and how your vehicle purchase is taxed will vary depending on the region and state you live in.
Don’t be caught off guard, always ask beforehand what fees are associated with buying a car in your local area. These charges can be anywhere from a few dollars, to a few thousand dollars.
A good way to find out this information is to ask for an itemized list from the dealership you’re buying the car from. Any legitimate car dealership should be able to email this list to you when requested.
Car Price Quotes
Use my recommended tools to find the best deals in your local area.
RydeShopper, Edmunds and Motor Trend are the quickest way to compare new car prices in your local area. These online sites will provide you with free, no-obligation price quotes and the discounts you receive will give you confidence on your next new car purchase. Walk away from the dealership knowing you received a good deal, not hoping you did.