Car Purchase in the USA - Considering Dealer Fees


In Europe, the principle for price indications is that they must be final prices. Therefore, the stated amount includes the sales tax - often separately itemized - and other costs associated with a purchase. This naturally applies to car purchases as well.

This is not the case in the USA. Here, additional amounts are added to the stated price for vehicles, which are often only specified when the buyer and dealer have agreed and a contract is signed. For German buyers purchasing a vehicle in the United States, the so-called documentation fee is particularly relevant. In addition, dealers charge their customers fees for US registration and sales tax. There are also other fees, but these are not consistently applied.

Varying Prices from State to State

A documentation fee is completely unknown in Germany. This fee is intended to cover the back-office costs of the car dealer. The paperwork involved in selling new or used cars requires a lot of work and effort. This is often handled by dedicated employees or the sales staff has to devote a significant part of their working time to it.

The calculation of the documentation fee is a standard practice across the US. Some car dealers are negotiable on the amount, many are not. It is not even mandatory for the fee to be explicitly mentioned in the invoice. Many dealers tend to not itemize the documentation fee separately, but rather combine it with other "additional costs" of the purchase into one item. A reason why many US car buyers pay little attention to the documentation fee, although the costs can be quite noticeable.

The amount of the documentation fee varies from state to state. The range is from a low of $55 to a high of $607. In 35 states, there are no legal limits to the fee, creating "room for maneuver" from the dealer's perspective. Sometimes the fees are calculated as a percentage of the agreed purchase price, and sometimes fixed amounts are applied. Only in one state - Alaska - must the fee be included in the car price; in all other states, it is calculated additionally.

The most expensive states in this regard are currently Florida (average $607), followed by Colorado ($508) and Georgia ($502). At the other end of the scale is California with an average of $55. The table listed here shows the current average values for all US states.

Consideration in Calculation

Consequence: two identical vehicles in terms of equipment, age, and condition, offered in Florida and California for $20,000 each, do not cost the same. In California, the car is on average about $550 cheaper. Of course, this is an isolated view, with other possible cost differences - such as transportation costs - not taken into account. However, German buyers should be aware that the documentation fee needs to be considered in their calculations.

Average Dealer Fees by State

StateDealer Fees
FloridaUSD 607
ColoradoUSD 508
GeorgiaUSD 502
North CarolinaUSD 466
AlabamaUSD 458
NevadaUSD 431
VirginiaUSD 403
ArizonaUSD 401
WyomingUSD 388
ConnecticutUSD 357
KentuckyUSD 354
MaineUSD 336
MassachusettsUSD 321
New HampshireUSD 304
IllinoisUSD 300
UtahUSD 293
South CarolinaUSD 293
IdahoUSD 286
MississippiUSD 274
New JerseyUSD 270
New MexicoUSD 263
OhioUSD 247
HawaiiUSD 245
OklahomaUSD 235
KansasUSD 235
Rhode IslandUSD 231
MontanaUSD 224
NebraskaUSD 222
MichiganUSD 220
MissouriUSD 190
IndianaUSD 178
West VirginiaUSD 175
WisconsinUSD 152
VermontUSD 148
WashingtonUSD 145
PennsylvaniaUSD 144
IowaUSD 134
MarylandUSD 131
TexasUSD 125
North DakotaUSD 124
LouisianaUSD 103
ArkansasUSD 97
South DakotaUSD 93
MinnesotaUSD 75
New YorkUSD 74
OregonUSD 61
CaliforniaUSD 55