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Some states are a bargain, but consumers in some states can expect to pay an extra couple of thousand dollars for costs you might not think of when you shop for a car – state and local sales tax, registration fee and so-called “doc fees,” short for dealer documentation fees.
Consumers should budget for those extra fees when they’re shopping for cars and negotiating the price. Unexpected fees can cause sticker shock, or they could even be a deal-breaker for consumers on a tight budget.
MojoMotors.com, a used-car classified ad site, said its recent research showed Alabama was the most expensive state for those items, at an estimated average of $2,313. Oregon was the cheapest, at only $127. That’s based on the purchase and registration of an average-priced used car, which MojoMotors.com pegged at $16,500.
Here are the five most expensive and the five cheapest states, in terms of what percent of the price of the car those three fees represent. Total fees are the sum of average state and local sales tax, average state registration fee and average dealer doc fee.
Most Expensive States:
1. Alabama; $2,313 average total fees; 14 percent of sales price;
2. Arizona; $2,297 average total fees; 13.9 percent of sales price;
3. Colorado; $2,284 average total fees; 13.8 percent of sales price;
4. Tennessee; $2,061 average total fees; 12.5 percent of sales price;
5. Florida; $1,869 average total fees; 11.3 percent of sales price.
1. Oregon; $127 average total fees; 0.8 percent of sales price;
2. Alaska; $356 average total fees; 2.2 percent of sales price;
3. New Hampshire; $359 average total fees; 2.2 percent of sales price;
4. Montana; $724 average total fees; 4.4 percent of sales price;
5. Hawaii; $817 average total fees; 5 percent of sales price.
“The motivation behind this research is that people ask us all the time, ‘What’s it really going to cost out the door? What’s the out-the-door price?’ ” said Paul Nadjarian, founder and CEO of New York-based MojoMotors.com.
In researching that question, the company found wide variations. The average “doc fee” in different states, for instance, ranges from zero in a few states to basically whatever the market will bear, Nadjarian said.
On the face of it, the doc fee is a convenience fee for the dealership to handle the paperwork related to your purchase. This may represent some real value, potentially saving you multiple trips to the dreaded state Department of Motor Vehicles.
However, consumers should be aware ahead of time what they can expect. “Nine states have a limit on how much you can charge. Six states have restrictions on how you disclose it and the terminology you use. In 36 states, the average is less than $300, which probably strikes you and me as pretty reasonable,” Nadjarian said.
But in Florida, for instance, MojoMotors.com found doc fees as high as $998. The average dealer doc fee in Florida was $610, the company said.
According to TrueCar.com, dealerships are probably not going to be willing to negotiate a lower doc fee. That could open dealerships to lawsuits from customers who paid higher fees, the shopping web site said. However, customers might be able to get a dealership to negotiate a lower price on the car to offset high fees, TrueCar.com said. Edmunds.com, another shopping site, gives similar advice.
Nadjarian said it’s also probably not worth trying to buy a car in a lower-cost state and “import” it to a higher-cost state, since the car has to be registered where the consumer lives, not where the car was purchased. In fact, it could even cost more than buying the car at home, since the dealership in the low-cost state is probably going to charge extra for having to register a car out of state.
However, if you’re about to move, or if you live in more than one state, before you buy a car it might be worth it to consider which state is to your best advantage.
[Related: 10 rasiest cars to bargain for]