Car Dealer Fees Explained for Used Car Buyers

Car dealer fees fall into two groups, government charges like tax, title and registration, and dealer charges like doc fees and add ons that the dealer sets.

Two Kinds of Fees

Every line on a buyer's order is either a government charge or a dealer charge. Knowing which is which is most of the battle.

Government charges are set by your state and sometimes your county or city. The dealer collects them and passes them on. You cannot bargain them down, but you can ask to see how they were figured.

Dealer charges are set by the dealer. Some are standard at nearly every lot. Others are extras. All of them affect what you pay, so treat them as part of the price.

Government Charges

• Sales tax. Set by your state and local area. Some states tax the price after a trade in, and some do not.
• Title fee. The state charge to put the car in your name.
• Registration and plates. The state charge to register the car. It can depend on the car's value, weight or age.

The dealer should be able to show how each number was worked out. If a title or registration line looks high, ask what is in it. Sometimes a dealer service charge is folded in with the state fee.

The Doc Fee

A documentation fee, or doc fee, is what the dealer charges to handle the paperwork. Nearly every dealer charges one.

Some states cap doc fees and others do not, so the amount varies a lot from place to place. Check your state's rules. Many dealers will not remove the doc fee because they charge it to everyone. You can still ask them to lower the car's price by the same amount. The total is what matters.

Ask for the doc fee up front, before you agree on a price. When two dealers list similar cars at close prices, the doc fee can decide which deal is better. It is easy to miss if you only look at the price on the windshield or the website.

Destination and Freight

A destination charge is part of new car pricing. It covers shipping the car from the factory. A used car is not shipped from a factory, so a destination or freight line on a used car deal deserves a direct question. Ask what it is for. If there is no clear answer, ask for it to come off.

Dealer Add Ons

Add ons are products the dealer puts on the car or into the deal. Some are already on the car when you see it. Common ones include the following.

• VIN etching. The VIN is etched into the windows to deter theft.
• Nitrogen in the tires. The tires are filled with nitrogen instead of regular air.
• Paint or fabric protection. A coating on the paint or seats.
• Market adjustment. A plain markup over the listed price, often seen when a model is in high demand.

All of these are dealer charges, and all of them can be questioned. You can decline them, ask for them to be removed, or ask for a lower price to offset them. If an add on is already on the car and cannot be removed, negotiate the total.

Also watch for products added in the finance office, like service contracts. Those are covered in our guide on extended car warranties.

Ask for the Out the Door Price

The out the door price is the total you will pay, including the car, every fee, tax, title and registration. It is the only number that lets you compare two dealers fairly.

Ask for it in writing, by email or on a printed buyer's order, before you visit or before you sign anything. Then compare it line by line with the final contract. If a new charge shows up at signing, ask what it is and why it was not on the quote.

Monthly payments hide fees well. A small charge spread over years barely moves the payment. Our guide to negotiating a used car price shows how to keep the focus on the total. Reviews that complain about surprise fees are worth reading too, and you can see how past buyers rated dealers in our dealer directory.

Spend on the Car, Not the Extras

Money you save by dropping an add on is better spent learning what shape the car is in. An independent used car inspection covers 122 points, a full OBD-II scan, a road test, and tire and brake measurements, with photos of anything we find. We go to the lot, you do not need to be there, and you get the report the same day.

Common Questions

Get the Car Inspected