What New Car Fees Should You Pay?

Edmunds.comEdmunds.com Member, Administrator, Moderator Posts: 10,316
edited April 2017 in Editorial
imageWhat New Car Fees Should You Pay?

Car-buying fees are confusing and costly for buyers. Find out ahead of time which new car fees are legit.

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  • pnwson_pnwson_ Member Posts: 1
    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.
  • mzzdamzzda Member Posts: 1
    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.
  • mrsalwayswritemrsalwayswrite Member Posts: 1
    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.
  • reuben_ahmedreuben_ahmed Member Posts: 1
    Did pwnson say the Chevy Cruze or Ford Focus was a "must have" car? LOL!
  • fresco1fresco1 Member Posts: 1
    FYI: Texas's auto sales tax is 6.25%
  • zeke108zeke108 Member Posts: 1
    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?
  • hms3683hms3683 Member Posts: 1
    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.
  • cheryl2cheryl2 Member Posts: 1
    I found a car out of state. How would that be handled?
  • tboostertbooster Member Posts: 1
    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.
  • iamacat2iamacat2 Member Posts: 1
    Oklahoma doesn't charge sales tax per se, it's an excise tax that is 3.25%.
  • igozoomzoomigozoomzoom Member Posts: 801
    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).
    2015.5 Volvo S60 T6 Drive-E Platinum, 2012 Mazda CX-9 GT
  • lisal321lisal321 Member Posts: 0
    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.
  • carguy7265carguy7265 Member Posts: 2
    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
  • carguy7265carguy7265 Member Posts: 2
    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
  • schmoopyboopschmoopyboop Member Posts: 1
    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.
  • whatfuturewhatfuture Member Posts: 46
    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.
  • triplesectriplesec Member Posts: 2
    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.
  • triplesectriplesec Member Posts: 2
    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_buyerpenn_buyer Member Posts: 1
    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.
  • fandswfandsw Member Posts: 37
    edited March 2015
    Your Alabama Sales Tax numbers are WRONG. I've never paid over 2.875%, and I have no idea where you got such a high number from, which is even higher than the Alabama General Sales tax rates.
  • agentorangeagentorange Member Posts: 893
    The "doc fee" scam in Nevada is nothing short of criminal IMHO. The DMV charges $33 and they dealers here typically charge $400. Bag. That. Noise. I've walked away from deals at car lots that refuse to charge a more reasonable level.
  • MichaellMichaell Moderator Posts: 251,966
    Just adjust your offering price to mitigate or eliminate the fee.

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  • masterncmasternc Member Posts: 14
    PA's doc fees may be low because most dealers add a separate "messenger fee" to process the DMV paperwork. That can vary widely.
  • phill1phill1 Member Posts: 319
    Dealer Doc Fee`s or Dealer Prep Fee`s are bogus profit margin boosters and nothing else. The Car gets a Wash Job and the Buyer gets a "Hose" Job! To avoid paying anywhere from $500 to $700 or more for absolutely nothing, if the "Fee" is already pre-printed on the Purchase & Sale Agreement and their GM states that (everyone) must pay it, agree! Simply state that on the appropriate lines above where Trade-In Allowance or Cash Discounted Allowance is added, that figure be (INCREASED) to the same figure as the Dealer Doc Fee is down below to offset that ripoff! If they balk, simply walk and go to another Dealership!
  • emptyfaces1emptyfaces1 Member Posts: 1
    I'm looking at leasing the Maserati Ghibli in the near future. Is this vehicle worth the price tag of $89,000-$105,000 or is the Mercedes Benz GLE 63S AMG a much better deal for a similar price tag?
  • karhill1karhill1 Member Posts: 165
    Please Edmunds stop giving an suggestion those documentation fees may be valid. They are not!

    First, the only valid fees on a new vehicle purchase are those imposed by the government. Those are not a dealer cost and it is the buyer who pays those valid fees.

    A documentation fee is not a fee! It is a cost, a dealer cost associated with the preparation of documents. This is no different than any other dealer cost such as heat, power, office supplies, employee wages, etc. As a dealer cost, any cost associated with the preparation of documents is included in the selling price. Price by definition includes all dealer costs plus profit (or loss). That is basic cost accounting.

    Really, with today's computers the actual cost to the dealer to prepare paperwork is immaterial, probably much less than $50. Certainly nothing like the hundreds of dollars many dealers try to charge customers for documentation.

    The real purpose of a documentation fee is simply to deceive unsuspecting buyers. Dealer F&I managers, the real questionable people in any dealership, concocted this scheme many years ago. A documentation fee is actually the selling price separated into two parts, price and documentation fee. Dealers do this for many reasons, not the least of which is to have the ability to advertise a lower price which they hope will entice buyers to visit their dealership. Of course, they also hope this deception will increase their profit.

    Any intelligent car buyer knows the true selling price of a vehicle is the negotiated price plus the documentation fee.

    When I buy if I want a price of $20,000 and the dealer has a doc fee of $300, my offer is $19,700. I have yet to encounter a dealer who would not conceded the doc fee when questioned. My daughter recently bought a new Toyota. Dealer had a $200 doc fee. After negotiating the price, and on my recommendation, she questioned the doc fee. They dealer adjusted the value of trade to compensate for the doc fee plus $50.

    Most dealers now have the doc fee printed on the sales contract. This does not mean a buyer has to pay the fake fee. This is just another ploy by the dealer as an attempt to add some false validity to the fee. Another reason they pre-print the fee is to avoid a potential law suit. Dealers know they risk being sued if they do not charge the fee to everyone. Pre-printing the fee on every sales contract provides them protection from such law suits. However, the pre-print does not mean a buyer has to pay the fee. Simply have the dealer lower the price to account for the fee or have the dealer increase the trade value to cover the fee, as happened with my daughter.

    One thing to recognize is there is no law or other regulation which requires a buyer to pay the fee, even if printed. If a dealer F&I person states this they are lying. It might be fun, if the F&I person tells you everyone must pay the fee, to ask the F&I person to put that in writing. My bet is they will never put it in writing because that would allow them to be sued. Of course, if the F&I person suggests everyone must pay the fee really listen to what they say. Saying everyone pays the fee is much different than saying everyone is required to pay the fee. If they say everyone is required, do not hesitate to ask what requires everyone to pay the fee. Is it a law, regulation, or simply the dealer's policy.

    A couple of years ago, we were buying a new Ford. I questioned the doc fee and got an immediate consideration. What was interesting was another guy in the next cubicle was also questioning the fee. The dealer also gave him immediate consideration.

    The point is all buyers should question these fees. A buyer should never lay down and pay the fee. That simply encourages dealers to continue this charade.

    Anyone interested in an honest dealers view of these documentation fees should GOOGLE Earl Stewart on Cars. Stewart is a Florida Toyota dealer who provides real honest insight into a dealer's true objective. His take is quite enlightening.
  • isellhondasisellhondas Member Posts: 20,342
    edited October 2015
    People need to understand that making a profit isn't a bad thing

    People want to squeeze every last cent out of a car deal. They know what the invoice is, they know what (if any) the incentives are and they want to buy the cars for that number or even less!

    So they impose a doc fee in an attempt to make "something"/

    The buyers have no idea of the costs of opening the doors and doing business.

  • tonyg2016tonyg2016 Member Posts: 737
    Buyers have no idea of the true cost of the car thus making a reasonable offer with profit very difficult...
  • canadian123canadian123 Member Posts: 5
    Doc fee is Missouri is limited by law to less than $200. So dealers generally charge $199.
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,481
    cheryl2 said:

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

    You might get charged a transportation fee by a dealer if he's picking a car up for you---but it should be reasonable.

    Or are you referring to taxes?
  • swampoodleswampoodle Member Posts: 1
    On used cars, don't pay a "reconditioning fee". It has shown up in the DC area. It is said to cover the dealer's cost to recondition the car he bought to sell as a used car. But remember he paid less for the car, either as a trade-in or at an auction, because it needed reconditioning. Having already been compensated for the condition of the car by the lower acquisition cost, the dealer is seeking to be again compensated by the purchaser by collecting a "reconditioning fee".
  • msminkck1msminkck1 Member Posts: 7
    I hope you all update this soon. Just went shopping this past weekend. One dealer has a $599 admin fee and the other $699, both in the same state, both non-luxury vehicle dealerships.
  • Mr_ShiftrightMr_Shiftright Member Posts: 64,481
    Thanks for posting that!
  • EricSmitEricSmit Member Posts: 1
    As of 14 Feb 2019 Michigan's doc fee went up to $220.
  • AngusAngus Member Posts: 1
    Doc fees are a joke. Just an add on because they can. But folks, they can and do because we allow it. It's a cost of doing business. Look at the dealerships, they don't have that inventory, employees, utilities, and everything else by making money doing oil changes. They make a crapload of money on vehicle sales. They have most buyers fooled with the terms they use. Invoice is one. There are more than one invoice, you need to research this and realize hiw much they actually make. Don't get me wrong, they have to make money. Do they charge you a "trash" fee for disposing of the paper and plastic protection that come on new vehicles they remove and throw away? A "wash" fee? A doc fee, give me a break. It takes them mere minuted to do the paperwork. Tuff cookies. Cost of doing business. How about we charge them a "buyers" fee? I've currently made a trip, soon another to a dealer. I will have approximately 6 hours of my time, not to say close to 100 miles on my vehicle to "buy" there's. I'm going to add a buyers fee to my negotiation. Or maybe we can agree, it's simply a cost of doing business. On both ends.
  • berriberri Member Posts: 10,165
    A lot of them don't even give you a full tank of gas anymore either
  • mtnancemtnance Member Posts: 3
    and one more things folks. If you are with another person (family/friend) in the cubical and the sales person walks out to "check" with his manager or for any other reason, the phone is left on "open mic" so they can listen in to your "private" discussions of the deal, good or bad. This way, they are able to angle a sales pitch .
  • DaverceeDavercee Member Posts: 101
    Hmm, better write these details down. Might come in handy.
  • Dogbreath60Dogbreath60 Member Posts: 1
    I was noticing in an add for a used car. At the bottom of the page it states that tax,licensing, registration, title,VTR,& Doc fees are not included in the selling price. So what is a VTR fee? I started seeing these 3 letters about 2 months ago. On Chapman Hyundai/Mazda dealership's web page.
  • kyfdxkyfdx Moderator Posts: 253,339

    I was noticing in an add for a used car. At the bottom of the page it states that tax,licensing, registration, title,VTR,& Doc fees are not included in the selling price. So what is a VTR fee? I started seeing these 3 letters about 2 months ago. On Chapman Hyundai/Mazda dealership's web page.

    Vehicle Theft Registration

    A big fee paid for etching some VIN numbers on the glass, etc.

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  • ImovemetalImovemetal Member Posts: 1
    edited December 2019
    Your tax rate for Texas is wrong, Automobile rate is 6.25% i haven't bothered to check the rest.
    THIS IS A GOOD LINK TO USE
    https://www.carmax.com/car-financing/car-payment-calculator
  • ken117ken117 Member Posts: 249
    The simple reality is the only fees associated with the purchase of a new vehicle are those imposed by a third party, the government. These include registration and sales tax. There may be other minor fees.

    The exception to this is on a lease there is an acquisition fee which comes from the leasing company.

    Any other fee a dealer attempts to charge is fake. Usually these are called documentation fee. Regardless of what they are called they are fake.

    Dealers sell at price. Price includes all dealer costs plus profit. All dealer cost includes the very minor amount required for documentation. When you buy a new vehicle all the documents are completed while you are visiting that smiling F&I person.

    The only additional cost to the dealer for these documents are small amount to transfer the documents to the MVA and to store the documents. The documents are transferred to the MVA either in a batch or electronically. Ask yourself if this costs the dealer up to $800 as noted in the chart for Florida?

    The answer, NO!

    Dealers and their cohorts in the media who argue such fees are legit are wrong.

    Dealers will say they are required to charge these fees to everyone. Their purpose is to fool the buyer into believing the fees are required by law. They are not. Maryland, for example, requires dealers to note in any communication the fees are not required by law. Of course Maryland dealers try to hide this fact in the wee print.

    As others have noted, these fees are nothing more than a profit grab by dealers. Dealers hope buyers will negotiate the price and simply accept the fee.

    Personally, I have yet to find a dealer who will not eliminate this fee in some fashion. For example, recently I purchased a new BMW. After price was settled, the sales person presented the numbers. Included was a $299 doc fee. I balked and the dealer removed the fee. In this case the dealer was not going to lose a $60,000 sale over a silly doc fee.

    In another case, helping my daughter buy a new Honda, the dealer also had a $300 fee. Again we balked. The dealer rewrote the deal to increase the value of the trade by $300. During this buy, there was another buyer in the next room. He also argued this fee and I could see the dealer compensated as with our deal.

    Note, most dealers today have this fee printed on the sales contract. Just another tactic to fool the buyer into believe the fee is legit. Again, it is fake. Just because it is printed on the contract does not mean a buyer must pay it.

    Be smart, do not fall for this con.

    The simplest way to combat these fees is to adjust you price offer to compensate. If your price offer is $30,000 and the dealer has a $800 fee (Florida), just offer $29,200.

    In the end be a smart buyer. Understand you control the negotiations. Understand the last thing any dealer wants is a viable buyer (one with the will and means to buy) walking away. Understand a new vehicle is a commodity, available at many places. Understand there is nothing compelling you to buy at any dealer.

    Auto sales people will dispute the above. But they know it is true.

    For a real dealer's view on these fake fees, GOOGLE EarlStewartonCars.
  • watchdoc168watchdoc168 Member Posts: 1
    I received a quote for an Audi and included the following

    Kahu 299.00
    Key Care 295.00
    Est Tags 300.00
    Doc fee 300.00

    I have purchased vehicles and never came cross fees such as "Kahu" and "key care" fees. Before I negotiate the price further, just want to see how much of this is actually legitimate?
  • MichaellMichaell Moderator Posts: 251,966

    I received a quote for an Audi and included the following

    Kahu 299.00
    Key Care 295.00
    Est Tags 300.00
    Doc fee 300.00

    I have purchased vehicles and never came cross fees such as "Kahu" and "key care" fees. Before I negotiate the price further, just want to see how much of this is actually legitimate?

    The "Est Tags" is the only true legitimate fee on the list - that's the cost of registering / titling / obtaining plates for the car.

    For the rest, simply negotiate a lower selling price to negate them.

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  • Djea3Djea3 Member Posts: 2
    There is NO excuse for a "doc" fee. It is an added Pure Profit for a dealership and used by dealers for profit and to lower the commission of salesmen.
    If there is a "Doc" fee then why not a list of other "profit fees" such as : electricity fee, water fee, building maintenance fee, building rental fee, computer lease fee, .....
    I coul dgo on and on ad nauseam. The bottom line is that the cost of handling the paperwork of buying and selling cars as a dealership is a "normal" cost of doing business. Just like rental on a building or paying property tax on the building.
    To even suggest that it is "rational" to have a charge to the customer for doing what a business must by state and federal law as well as tax laws do is insane.
    No you are WRONG 100% ni how you as EDMUNDS are dealing with this. Instead you should be using your geography to give a TOTAL price OUT THE DOOR before taxes at any dealership. This makes MUCH more sense.

    Also Edmunds, if one state allows unlimited fees but the average is 600 and the neighboring state limits the fees to 80 then there is a NET COST DIFFERENCE in those states the must be reflected in your statistics. IT also means that SOME buyers should be cautioned to shop in the nearby neighboring state when possible!!!! This would be an incredible help and in fact could change the industry from its archaic attempt at ROBBERY after negotiation.
  • jjcomerjjcomer Member Posts: 1
    The issue with doc fees is that unless all dealers stop the practice, the dealership who stops will be at an immediate disadvantage because they will not be as competitive on the advertised price.
  • MichaellMichaell Moderator Posts: 251,966
    jjcomer said:

    The issue with doc fees is that unless all dealers stop the practice, the dealership who stops will be at an immediate disadvantage because they will not be as competitive on the advertised price.

    Can you provide an example of how that would work?

    Generally, the doc fees are buried in the fine print. If two dealers offer the same car for $29,995, it one has a $1000 doc fee and the other doesn't, how does the one without a doc fee be at a disadvantage?

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  • DiamondDiamond Member Posts: 1
    I live in NY, on the border of New Jersey. Is this correct? If I buy a car in the State of NJ, my DMV fees should be the fee for NY? The trade in tax credit and incentives being taxed are for NJ? There is a $75 doc fee max in NY, but NJ is no limit, and the median fee is $399. That I can negotiate...otherwise I'll just go to a NY dealer. I'm just a bit unsure about what happens when you live in one state, but buy in another. Any advice?
  • kyfdxkyfdx Moderator Posts: 253,339
    Diamond said:

    I live in NY, on the border of New Jersey. Is this correct? If I buy a car in the State of NJ, my DMV fees should be the fee for NY? The trade in tax credit and incentives being taxed are for NJ? There is a $75 doc fee max in NY, but NJ is no limit, and the median fee is $399. That I can negotiate...otherwise I'll just go to a NY dealer. I'm just a bit unsure about what happens when you live in one state, but buy in another. Any advice?

    Any title/registration or taxes will all be paid to NY, at NY rates, if you are registering the car in NY
    Doc fees are up to the dealer.

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