What Fees You Should (and Shouldn’t) Pay When Buying a Car

Buying a new car comes with a lot of additional charges, including sales tax, registration and documentation costs, and destination fees.
Written by Jake Biderman
Reviewed by Kathleen Flear
Mandatory new car fees could include sales tax, registration costs, and documentation and destination fees. There may be additional fees that you can avoid through negotiation.
  • Some fees, like sales tax and registration fees, are mandatory when you buy a new car.
  • Other fees, like dealer or advertising fees, may be negotiable.
  • Read the fine print carefully on your purchase agreement to make sure you understand all the fees you’re being charged.
  • Keep in mind that you’ll also have to buy
    car insurance for a new car

What fees are added when buying a new car?

While you can haggle down or barter your way out of many fees, some are simply unavoidable. You will often have to pay these fees, regardless of the vehicle you’re buying or the car dealer you’re using.
  • Sales tax: How much you’ll pay in sales taxes depends on how much the car’s MSRP and what state you’re registering it in. (If you’re
    trading in a vehicle
    , you pay a lot less tax. Rather than being taxed on the cost of the new vehicle, you’ll only pay taxes on the difference between the new car and the trade-in.)
  • Registration costs: The dealer will likely
    register the car
    for you, which saves you a trip to your local Department of Motor Vehicles. But since it costs money to file those documents with the DMV, they’ll pass that vehicle registration fee onto you.
  • Documentation fee: Dealers charge "doc fees" to offset the cost of writing up the sales paperwork. While you might not be able to avoid this one, you may be able to haggle it down. Doc fees vary between dealerships and states.
  • Destination fee: If the car you’re buying isn’t on the dealer’s lot, they have to transport it there—and that costs money. You can avoid the destination fee by buying cars that are already at the dealership.
Key Takeaway: In most situations, car buyers have to pay sales taxes, registration costs, and documentation fees on a new vehicle.

Fees you shouldn’t have to pay when buying a new car

Of course, dealers might try to sneak other fees into your contract—and most people don’t question them. Here are some fees that you might be able to avoid.
  • Dealer fees or "dealer prep": Dealer fees cover the cost of getting the vehicle ready for you—but that’s included as part of the mandatory destination fees. If you see this on your invoice, you can try to challenge it.
  • Advertising fees: Dealers may ask you to pay for some of their advertising, which can range from hundreds to thousands of dollars depending on the vehicle. This isn’t your responsibility!
  • Dealer add-ons: If a dealer added new equipment to the car, like tinted windows, they may try to charge you extra for it.
  • Anti-theft measures: The dealer may add features to deter thieves, such as etching your VIN into the car or adding new alarm systems.
  • Additional features: Keep an eye out for so-called "features" like paint protection or fabric protection. These additions do very little for you, but dealers sometimes charge high fees for them.
Key Takeaway: You might be able to challenge costs like dealer and advertising fees to reduce the overall cost of your vehicle.

How to handle fees

Understanding the fees before you visit the dealer is the best way to set yourself up for success at the negotiating table. If you see an unknown charge or hear a salesperson mention a new fee, ask if it’s really necessary.
Here are some steps to help you handle (potentially) unnecessary fees at the dealership.
  • Find out about local fees: Know how much you should expect to pay in fees when you’re car shopping in your state. Edmunds has a
    handy fee chart
    that outlines the typical car-buying fees by state. You can also ask around at rival dealerships to find out what they charge.
  • Set a budget: If you have a firm budget in mind, you’ll be in a better bargaining position. You’ll be less likely to be talked into paying more for extra features.
  • Negotiate prices: Whenever you can, ask if prices can be brought down. Find out why each fee costs what it does, and see if you can get the dealership to discount it.
  • Ask about fees—and do it often: You can avoid unnecessary fees by asking early on about what the dealer will charge you. This is also a good opportunity to find out what other dealerships charge and to compare prices.
  • Comparison shop: A dealership with affordable car prices but excessively high fees could end up costing you more than you’d pay at another lot.
  • Avoid supplemental stickers: Some dealerships will add a second sticker—usually next to the price sticker—for add-ons and markups. Ask for those stickers and add-ons to be removed, or avoid those lots altogether.

Finding the best car insurance for your new ride

Getting a good deal on your car means nothing if you end up in an accident without insurance. The best way to protect your investment is to purchase adequate insurance coverage. Try using an insurance comparison tool like the
app to get the coverage you need at a price you like. 
“I would 11/10 recommend
. I was originally quoted $700+ for insurance for my new car, but by using Jerry I got my payments down to $320 a month. They also have a great support team ready to answer any questions!” —Tobias F. 
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No matter what, you’ll have to pay sales tax, registration fees, license plate fees, and documentation fees on your new car. If the car is being driven to the lot for you, you’ll also have to pay a destination fee.
Some fees are negotiable, some aren’t. Any fee going to the dealer itself—like destination or documentation fees—might be negotiable. The dealer probably won’t budge on sales taxes or registration fees, since these are being charged by the state.
The key to avoiding extra dealer fees is common sense. Ask about extra charges early in the process and haggle when you can. 
Having a set budget for your new purchase will firm up your bargaining position and help you avoid going over budget.
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