In this article
Three fees on a used-car deal are set by your state, and you will pay them whoever you buy from. Everything else on the sheet belongs to the dealer, and most of it is negotiable or refusable. The trouble is that they all arrive on one page, in the same typeface, at the moment you are least inclined to argue.
Here is how to tell them apart.
What "out-the-door" means on a used car
The out-the-door price is the total you hand over to drive away: the agreed price of the car, plus sales tax, plus the title and registration fees, plus the dealer's documentation fee, less whatever your trade-in is worth. It is the only number worth comparing between two cars, because it is the only one that includes everything.
A used car works exactly like a new one here. Same formula, same state rate:
Price + sales tax + title + registration + doc fee − trade-in.
What changes with a used car is that more of the deal is negotiable, and that buying privately removes some of the fees entirely.
The fees you have to pay
Sales tax. Set by your state, and by your county or city on top in most of them. In most states the tax is charged on the price after your trade-in comes off, which is where a trade quietly earns more than its sticker value: trade a $5,000 car against a $20,000 one at a 6% rate and the trade saves you its own $5,000 plus $300 of tax. A handful of states tax the full price regardless, and a few do not tax vehicle purchases at all.
Title fee. Your state's charge for the certificate of title in your name. It is a fixed amount, usually somewhere between a few dollars and a little over $100 depending on the state. A dealer may pass it through, not mark it up.
Registration. Your state's charge for the plates and the registration. Some states charge a flat fee; others price it on the car's weight, its value or its age, so an older used car is often cheaper to register than a new one.
Those three are not negotiable, and no dealer can waive them. What you can do is check them, because a fee that is "set by the state" is a fee you can look up.
The fee that is the dealer's
The documentation fee, or doc fee, is the dealer's own charge for the paperwork. It is the line most often mistaken for a government fee, and it is not one.
Some states cap it by law. In those, dealers almost always charge the cap and rarely move; the productive move is to ask for the same amount off the price of the car instead. In the states with no cap, doc fees of several hundred dollars are normal and $800 to $999 is not unusual, and there the fee is simply part of the dealer's price. It is negotiable like any other part of it.
On a private sale there is no doc fee at all, because there is no dealer.
Fees to question, and usually refuse
None of the following is required by any state:
- Dealer prep or reconditioning. Getting a used car ready to sell is the cost of selling it. On a used car this charge is often several hundred dollars for a wash and an oil change.
- VIN etching, nitrogen tires, paint and fabric protection, undercoating. Aftermarket add-ons at showroom prices. Decline them. If they are already installed, they are still negotiable.
- Advertising fees. The dealer's marketing costs, passed to you.
- "Market adjustment" or "market value" lines. A price increase with a name.
- Certified pre-owned charges. A genuine manufacturer CPO inspection and warranty has real value, and the price should be in the price of the car. A separate CPO line item on top is a second bite.
- Dealer-arranged financing markup. Not a fee on the sheet, but the same thing: the rate you are quoted can be above the rate you were approved for. Get your own approval first and make them beat it.
The useful question is not "is this fee fair?" but "is this fee in the out-the-door number I already agreed?" If the answer is no, it is a new price and you can treat it as one.
Dealer or private sale: who collects what
From a dealer, the dealer collects the sales tax, the title fee and the registration and forwards them to the state, and adds their own doc fee. You sign one sheet.
From a private seller, you pay the seller for the car, and then you pay the state's sales tax yourself when you register it, in most states, at the same rate a dealer would have charged. There is no doc fee, no prep charge and no add-ons, but there is also no warranty and no recourse: whatever the car turns out to need is yours.
That difference is worth real money, and it is why a private-sale price and a dealer price are not comparable until you have worked out both out-the-door numbers.
A quick worked example
A $22,000 used car, a $4,000 trade-in, in a state with a 6% sales tax that gives a trade-in credit, and a dealer with a $499 doc fee. The rate here is illustrative; use your own state's.
- Price: $22,000
- Sales tax, 6% on $18,000 after the trade-in: $1,080
- Title fee: about $50
- Registration: about $90
- Doc fee: $499
- Less the trade-in: −$4,000
Out the door: $19,719. The tax and fees added $1,719 on top of the price that was advertised, and $499 of that was the dealer's, not the state's.
Change nothing but the state and that total moves by hundreds. Change nothing but the dealer and the doc fee alone can move it by $900.
How to check your own number
Two things worth doing before you sit down at the finance desk:
- Run your deal through the used-car section of our out-the-door price calculator. Enter the price, your state and your trade-in, and it fills in the tax rate and the typical fees so you can see the real total in about thirty seconds.
- Look up what your state actually charges. The sales tax, title, registration and doc-fee rules for every state are in one table, including which states cap the doc fee and which give you the trade-in tax credit.
Then ask the dealer for the out-the-door price in writing, before you discuss monthly payments. A number in writing is a number you can compare with another dealer's, and it is very hard to add a $600 prep charge to a figure you have already put in an email.
If you would rather not have the conversation at all
That is most of our work. We negotiate the out-the-door price on used and new cars on behalf of the buyer, which means the doc fee, the add-ons and the prep charge are our argument to have, not yours. You get the sheet, the number and the reasoning, before you sign anything.
Either way, the rule is the same: pay the three fees your state sets, and treat everything else as a price.
