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