When you are buying a car, there is more than just a loan to consider. You need to remember that there are also tax, title, and license fees, or TTL. So, you may be required to bring additional money to the table, depending on who you purchase the car from.
If you are purchasing a vehicle from a dealership, these fees can often be rolled into your auto loan, but if you are dealing with a private seller or getting your loan from the bank, you will need to pay these fees separately. With banks, there may be certain terms and conditions that will keep you from having the TTL fees rolled into the loan, whereas private sellers do not have the authority to collect these fees. In this case, you'll have to pay the tax, title, and license fees when you visit the DMV to register the vehicle.
However, even with a dealer, you may still not be able to avoid an out-of-pocket cost.
Cost of Tax, Title, and License Fees
Tax, title, and license fees are unavoidable. They're a mandated payment that is dictated by many factors. 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 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.
Tax, Title, and License Fees in U.S. States
Before buying a car, you should research TTL fees for your particular state. Several state Government and Department of Motor Vehicle websites offer handy calculators.
Depending on where you live, tax, title, and registration fees can add up to a significant amount of money. Why shouldn't you just roll these fees over into the total amount of your auto loan and worry about them later? There are a few compelling reasons to consider, including the fact that rolling these fees into your loan will mean paying interest on them and costing yourself more money. However, since some state fees can be relatively high, it may not be something that you want to handle all at once up front. In this case, rolling them into a loan may work for you.
When Do I Pay Tax, Title, and License Fees?
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 upfront, 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 upfront 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.
Paying Tax, Title and License Fees Up Front
The importance of paying your tax, title, and license fees up front has a lot to do with the current state of your credit. If you have a "good" to "excellent" credit score (above 700), you may be able to finance these charges, but you may not want to. On the other hand, if you have "bad" to "very bad" credit (a credit score below 620), it may actually be necessary for you to pay TTL fees out of pocket.
- Good Credit: If you are buying a car with good credit, you will probably be allowed to roll all of your fees into one neat bundle and finance the total. This is because you will be considered a "low-risk" borrower. A lender may have no issue permitting you to take out a loan that exceeds the cost of the vehicle, but you will probably save a little money by paying the fees separately. You will be paying interest on any charge that is financed. And even though you may be getting a prime interest rate, you could still spend money unnecessarily (if you don't get 0% financing) by adding TTL fees to your loan.
- Bad Credit: If you need to purchase a vehicle with moderately to severely damaged credit, you will be categorized as a "high-risk" borrower. And because a potential lender will be looking to minimize the loan risk, they may not be willing to extend a loan that is greater than the car's total price. Also, because of this risk factor, you will probably have to accept a higher-than-average interest rate on your auto loan. So, you will definitely save money by not adding TTL fees to the amount you are financing. By being able to provide tax, title, and license fees up front, you will both improve your loan approval chances and save money over the life of your loan. If you are unsure about where you currently stand with your credit, click here for information about how to obtain your credit score.
Buying a car with less-than-perfect credit can be challenging. However, if you are able to save up enough cash to at least cover TTL fees, you will give yourself a definite advantage. To make the purchasing process even easier, you can put aside a little more in order to put up a down payment. This way, you will be asking a lender to finance an amount that is actually less than the cost of the vehicle and you will build some equity in your vehicle.
How to Estimate Tax, Title, and License Fees
How much you pay depends on your Loan-to-Value ratio or LTV. This ratio is determined by the value of your loan compared to the book value of the vehicle. This ratio is affected by your credit score. If your credit is great, let's say, 700 or better, you should have no problem getting the TTL fees rolled into your payment.
Before you decide to roll these fees into your loan, consider this: do you really want to pay interest on these fees? Once they are rolled into the loan, you will be paying interest on those amounts as well. Depending on your interest rate, you may be better off just paying the fees upfront.
If your credit is bad – around 660 or lower – you will need to bring money to the table, not only to cover the fees but for a down payment as well. Of course, a trade-in may help cover some or all of the TTL fees. If you have a vehicle to trade in, there may be enough equity in it to pay for all – or a portion – of the fees.
At this point, you’re probably wondering: how much are the tax, title, and registration fees? Well, the tax is based on your state’s sales tax rate. For the most up-to-date information, your best bet is to contact your nearest DMV office or Secretary of State.
When You Can't Wait
Here at Auto Credit Express, we want you to make the best decision for your situation. And the best way to do that is to have all of the information you need. If you need to buy that next automobile and can't wait until your credit has improved, we can help. Just fill out the free and fast online auto loan request form today and we will begin the process of finding you the dealer that can get you into the car you need!
Frequently Asked Questions
When it comes to tax, title, and license fees, there are always questions, but the answer can differ depending on where you live. Here are a few questions we hear often from consumers.
How much is the tax, title, and license in Texas?
In Texas, the cost of your total vehicle tax, title, and license fees vary depending on the county you live in. There is a state sales tax of 6.25%, and a base registration fee of $50.75 according to the Texas Department of Motor Vehicles website. Additional fees such as a local tax, emission testing ($2.75), and electric vehicle fees ($200) may be collected depending on your situation. These fees can vary depending on where you live in the state, for example, local fees can range between $0 - $31.50, depending on the county. Be sure to check with the Texas DMV to see the fees in your area.
How much is the title and license in California?
California has many factors that determine how much you pay for title and registration fees. To license a vehicle in California you pay depending on your individual situation including, vehicle type, purchase price, vehicle value, the date you bought your car, city and county you live in, and vehicle weight. Plus, fees can be added to your registration in California if you need a special license, or if you have unpaid parking tickets or toll evasions. Title fees in California cost $27, and other fees depend on the factors listed above.
According to the California DMV, you will have to pay these fees in California when you register your vehicle:
- A registration fee
- California Highway Patrol fee
- Vehicle license fee
- Transportation improvement fee
- County/district fee
To determine your exact costs there is a calculator at the CA DMV website.
How much is the tag, tax, and title in Oklahoma?
Fees for vehicle registration in Oklahoma are a little more straightforward than in some other states. Registration starts at $96 per year for the first four years you own the vehicle and drops the longer you own the car. According to the Oklahoma.gov website, there are around another $20 in fees that are collected at the time of registration, and some of them can vary depending on your vehicle, like the tire tax.
How much is title and registration in Oregon?
According to the Oregon.gov website, there are a plethora of fees that come into play when you register a vehicle in the state. Your fees can vary greatly depending on your vehicle type, vehicle age, and your situation. Fees start at around $100 and go up from there. Oregon is one of the more expensive states to register a vehicle in, and you can see fees upwards of $300 in some counties, or if you have an EV. Fee charts can be found on the Oregon.gov website to help you determine your exact costs.
