Buying a new car can be a long and confusing process. Often times, selecting the right car for you is the simplest part…but then comes the paperwork…and it can seem endless. From Financing to other contracts, this can be the most complex part of the whole process. Fortunately for you, we’ve put together a list of definitions of possible car fees that you’ll encounter on those contracts and documents (you’re welcome). Here are the most common ones and what they will mean for you.
This one is obviously non-negotiable and required by state law. Enjoy your trip to the DMV. We recommend you look up all of the documentation you need before you go to register your vehicle. There’s nothing worse than waiting in line at the DMV and finding out you forgot your piece of mail to prove your address.
Okay, we all know that sales tax is one of the big car fees, but this actually differs in a couple ways from state to state. Percentages for each state are different. For example, Massachusetts comes in at a low 6.25% while Missourians will pay a whopping 10.73%. The other key difference in sales tax rules is the trade-in factor. In some states, when you trade a vehicle in, it will discount the cost of the new car and the difference between the two is the taxable amount. Other states don’t play by the same rules. It’s smart to look up where your state falls prior to making your purchase.
Doc (Documentation) Fee
When you see these car fees on the paperwork, they usually means the cost of covering the contracts and preparing the financing. Some states do have limits on what a dealer can charge for a doc fee. Most states have unlimited amounts, making this an advocate for negotiation. You may not be able to get it waived, but it’s worth a try.
This is where things get a little ambiguous. These fees can range from advertising fees, to prep fees, to shipping fees. Be sure to ask for explanations and do your best to negotiate on these if you feel that the definition is vague. Sometimes these align with the invoice and are legitimate fees. Other times, you may find they are additional add-ons that aren’t as justifiable.
Buying a new car should be an exciting process. There’s no way to avoid the paperwork, but hopefully the explanations here can help make it a breeze for you. Don’t rush through it. Be sure to stay focused on what each fee means. Who knows, you may just end up with some extra cash in your pocket.