What Is the Average Cost of Tax, Title, and License Fees?

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - September 18, 2019

It’s tough to put an exact number on the average cost of tax, title, and license fees since they vary greatly by state. The amount each state charges, and how they charge it, is all over the board. For example, there are some states that require an emissions inspection fee, and some that require a personal property tax/vehicle license fee.

Regardless of where you live, there are some fees you can’t avoid paying, and you should know what they are before you head to a dealership. In addition, there are some unnecessary fees that you shouldn’t have to pay; we can explain what they are, and how to avoid paying for them.

Fees You Must Pay for a Car Loan

Buying a car is expensive, and if you’re on a tight budget, it can be even more stressful to come up with the additional fees and dealer charges that are tacked onto the price of a car.

During your vehicle research and budgeting, know that these are the fees you must pay:

  • Documentation fee – Also called a doc fee, this is a fee dealerships charge you to handle all the paperwork. Most states have a cap on this fee, and the cap amount varies.
  • Registration and license plate fees – Car registration fees are always required, and you must pay this in order to register the vehicle and obtain license plates. Some states charge a flat rate, while others base it on the car’s value, age, or even weight. If you plan on transferring plates from a current vehicle, you need to pay a license plate transfer fee.
  • Title fee – You must pay a title fee in order to title the car in your name. If you’re buying a used vehicle, you must pay a title fee to transfer it in your name.
  • Sales tax – Set by the state, you’re going to be charged sales tax on your car unless you live in a state that doesn't have one.
  • Hybrid/EV fee – Due to the loss of gasoline tax revenue, according to the National Conference of State Legislatures, as of October 2018, 20 states now require a special, additional registration fee for certain hybrid and plug-in electric vehicles.
  • Destination charge – If you’re buying a brand new car, you’re going to be charged a destination fee. This covers the cost to deliver the vehicle from the factory to the dealers.

Keep in mind that some of these fees – such as sales tax, title, registration, and destination – aren’t negotiable, and are set by the state and the manufacturer. Any additional fees the dealership charges can be negotiated, like the doc fee.

Unnecessary Car Buying Fees

Dealers are in the car selling game to make a profit. Sometimes, a dealership may try to add additional charges. Here are some charges that you might come across that you shouldn't have to pay for.

If you see any of these three, don’t get caught paying for them:

  1. Dealer prep fee – This fee is already included in the MSRP; if a dealership tries to charge you a dealer prep fee, don’t think that you have to pay for it.
  2. VIN etching fee – Unless you really want to have your VIN etched into the vehicle’s glass right away, it’s not worth paying for at a dealership. If you want it, you can get it done more cheaply elsewhere.
  3. Customization fees – If you want to make the car unique, such as with pinstriping, rustproofing, and/or fabric protection, you can have these things done at a much lower cost elsewhere, or even do them yourself.

The Bottom Line

You can’t avoid all fees that are thrown at you when you buy a vehicle. It helps to know what these fees are, and to budget for them ahead of time, especially if you have bad credit and money is tight.

When you have your budget put together, you can research new and used cars here at CarsDirect. We can also help you find a local dealer that has the lending resources you’re looking for.

All you have to do is complete our free and fast auto loan request form, and we’ll get right to work.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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