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Jul 31 2019

What New-Car Fees Should You Pay, Edmunds, auto invoice prices.#Auto #invoice #prices


What New-Car Fees Should You Pay?

You’ve skillfully negotiated the price of your new car, and with the help of the Edmunds article on Negotiating Car Prices, you’re confident that you’re getting a 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 about. It leaves you wondering if these new-car fees really are legitimate.

To answer that question, Edmunds has created a chart with the most common fees you may encounter when you’re buying a new car. In addition, we show how 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 for quick reference.

Auto invoice prices

When you re working out the price of a car, ask if there are any dealer fees other than tax, title and documentation fees.

Auto invoice prices

Don t be caught off-guard by unexpected fees. Plan ahead by using our car-buyer fee chart.

Auto invoice prices

Car dealers handle the vehicle registration fees when you buy a car. It saves you a trip to the motor vehicle registry office.

Auto invoice prices

When you re working out the price of a car, ask if there are any dealer fees other than tax, title and documentation fees.

Auto invoice prices

Don t be caught off-guard by unexpected fees. Plan ahead by using our car-buyer fee chart.

Auto invoice prices

What Fees Will You See?

There are three categories of typical new-car fees: vehicle registration fee, sales tax and a documentation fee, or “doc fee.” Here’s an explanation of each:

Vehicle registration fee: This is the amount the state charges to register a 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 Department of Motor Vehicles. Usually, the more expensive the car is, or the more it weighs, the higher the registration fee.

Sales tax: Sales tax on a new car can take people by surprise. For example, at 8 percent, sales tax on a $20,000 car is $1,600. Cities and counties frequently add their own tax on top of the state tax, so the amount you pay can vary within a state. And note that the sales tax on vehicles often varies from the state’s normal sales tax rate.

Documentation fee: 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 limited by state law. In other states, the doc fees are unregulated. Dealerships may sell a car at an attractive price but then add a high doc fee to the contract.

Review the chart below to see how your state handles doc fees. If your state does not limit doc fees, find out early in the buying process what the dealership charges. If the doc fee is substantially higher than your state’s median, which is listed in the chart, negotiate the car’s price more aggressively to offset this fee. And keep in mind that dealers also charge sales tax on the doc fee.

The estimated median doc fees that dealers charge in each state is based on data Edmunds has collected from thousands of dealers nationwide. We’ve taken the data provided by those dealers, calculated a median fee, and rounded it up or down to the nearest $5. When you go car shopping, these estimates are a valuable guide to determine if a dealership is charging close to the typical doc fee in your state.

Remember that the doc fee is just one factor affecting your shopping experience and your choice of a dealership. For example, if a salesperson is giving you especially good customer service, then a higher doc fee might be acceptable to you. And if a dealership is giving you a very low purchase price, it might still result in a net savings for you, even after the higher doc fee.

Is the Car Sale Taxed?

You probably expect to be assessed sales tax on the amount you pay for your new vehicle, but it might surprise you to learn that there are other tax issues that can also affect your out-the-door cost. Here is how different states handle taxes:

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 credit” column for 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.

Rebates and incentives: Customer cash rebates and other incentives reduce the purchase price of the car. But most states charge sales tax on the full purchase amount before the rebate is applied. For a $25,000 car with a $500 rebate, that reduces the sale price to $24,500, but in most cases you’ll pay tax on the full $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 and incentives.

Are There Other Car-Buying Fees?

Yes. Here are two other car-buying fees that frequently arise and that buyers should know about:

Dealer fees: Some dealers write additional fees into the contract and give them official-sounding name, like “S ?>

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