Buying a new car - How are license fees calculated?

I want to ensure I do not get taken by the salesperson who may try to pad a low offered selling price by inflating the fees.

How are DMV or license fees calculated in California (or is there a set fee)?

Also, any insight on what fees I should expect (and the estimated fee cost), and what “fees” should i be on the lookout for?

CA DMV vehicle registration fee calculator.

For the record, if I were a car dealer, the last thing I would rip you off on is the licensing fees. It would be very easy to cross into illegal territory. Much easier to stick with undercoating and fabric protection plans.

You should be able to get a breakdown of any aggregated fees.

As SmackFu suggests, the sales contract shows registration as a separate line item, and I’ll bet there are laws requiring it to be so, and requiring it to match the actual state fees.

Let me tell you what to watch out for. Every car sales contract will have a mysterious line item called “Processing Fee” in the range of $200-300. They will always make it sound like it’s required, “Oh, it’s printed right here on the contract,” stuff like that. B.S. The last time I bought a new car I showed the sales manager a piece of paper with what I was willing to pay for the car and subtracted his processing fee off the top. They accepted my offer. The Processing Fee should really be labeled “Profit” because it’s just a “junk fee.”

Otherwise also be prepared to resist the onslought of the other high-margin stuff they will try to sell you, as SmackFu says.

Another tip that I learned recently is if you go on a test drive they will want to make a copy of your driver’s license, but they will often use that info to run a credit check to figure out your negotiating position. I have no firsthand experience with that so won’t take that one any further.

Around this part they call it the “doc” (-umentation) fee. It used to be limited by state law to $50 (obviously in my state, not yours [unless yours is mine]), but recently they’ve been allowed to raise to it $250. My father sells used cars in Las Vegas. He says some dealers there get up to $1000 on doc fees because, well, there are a lot of stupid customers (not his dealership; it’s a fixed price national chain with a good reputation). Also be aware of any fees that are initials. Honda likes to try to charge you for their advertisting, but I can’t remember the acronym. Lots of other foreign dealers have “ADM” which simply means (I kid you not!) “additional dealer markup”! That’s not to say the American car dealers don’t have their own tricks.

While on the subject, bring your own financing unless you have good enough credit to get promotional APR rates at the dealer. If you have average good credit, you can get those rates financing 80-90% of sticker. If you have supurb credit, you won’t have to make a down payment at all. I hate to say 10-20% down, because most banks only care about the proportion of the average retail price financed.

Just tell them they’re not authorized to do so. If they do anyway, they’re broken the law. So far I’m one-for-one on a dealer not running my credit with my drivers license, but really, they already knew I’d be paying with a credit card (it wasn’t a $60,000 Volvo, obviously). Oh, that reminds me – according to their credit card agreements, they’re not supposed to charge you a surcharge for using a credit card, if that’s what you choose to do.

Mine’s Virginia and I am aware of no legal limit here.

When the Japanese makers suddenly found that demand way outstripped supply back in the 80’s, dealers started selling cars for well above MSRP. The premium was ADM and lots of people were more than willing to pay it. I don’t know how prevalent this is now.

Agree. In any case, never negotiate financing and the purchase at the same time. Get your best deal on the car first. Otherwise they will try to get you to pay more for the car and promise you a good deal on the financing. Same is true of trade-in value.

I would suggest you check out www.edmunds.com and other similar sites for car pricing, and also get to your library and look up Consumer Reports for good advice on how to buy a new car. They usually do a whole issue on this stuff about once a year when the new models come out.

Confessions of a Car Salesman

Interesting read.