No matter your credit situation or which car you choose, you’re required to pay tax, title, and license (TTL) fees on a bad credit auto loan. TTL fees must be paid in order to take delivery of a vehicle, but how you pay them depends on your financial situation and what makes sense in your current situation.
Do I Pay Now or Pay Later?
When buying a car through a dealership, the dealer handles paying the fees and submitting the paperwork, so you don’t have to deal with your DMV or Secretary of State.
Typically, the best way to pay for tax, title, and license fees is in cash when you take delivery of your car at a dealership. Plus, when you pay cash for these fees up front, you avoid having to pay interest on them – reducing the overall cost of your auto loan.
The only instance where a dealer can't take care of these fees for you is if you’re purchasing a vehicle from a private seller. In this case, you need to visit the DMV or Secretary of State and handle the paperwork yourself, which can be tedious and time consuming.
If you can’t afford to pay the TTL fees up front at the dealership, it’s possible the lender may allow you to roll them into the car loan. You don’t need the cash up front, but you end up paying interest on them over the course of your loan term, which increases your total cost in the long run.
Cost of Tax, Title, and License Fees
Now that you know when you pay for TTL fees, just how much can you expect to pay? Ultimately, the cost of these fees depends on the state you live in and a few other factors, but let’s break each fee down:
- Vehicle’s sales tax – A car’s sales tax is based on the tax rate where you live, which could also include city, county, and/or municipality taxes.
- Title fee – The title fee is a one-time fee that’s paid when the vehicle title is transferred to you.
- License fee – License (registration) fees depend on the state where you live. Some states collect license fees at a flat rate on an annual or bi-annual basis, and some states vary registration fees based on a car’s cost, weight, age, or fuel efficiency. It’s also possible that you could be charged a premium if you drive a specific type of vehicle.
Auto Credit Express Tip: To understand your state’s TTL fees and how they work, make sure you visit your state government site to read more about the laws in your state.
The Bottom Line
Tax, title, and license fees are inevitable – you can’t avoid paying them, and you should try to pay for them up front to avoid additional interest charges. One last thing to keep in mind: TTL fees are just one part of the overall cost of buying a vehicle. You need to consider additional factors such as maintenance and fuel costs, and budget accordingly.
If you’re looking for a good tool to budget for all these fees and additional costs, check out our Car Loan Estimator and Payment Calculator. The numbers you get are estimates, but they give you a good idea on where you stand.
When you're ready to take out a bad credit auto loan, Auto Credit Express is here to connect you to a dealer that can help. We’ve been helping consumers find financing for over 20 years by connecting them to local dealerships that know how to handle bad credit. To get started, fill out our car loan request form.