Ask Sid: High Charges for Car Tags

Q. I negotiated what I thought was a good price for a new car. But when the agreement was written, I was charged $359 for “tags.” I know my state charges only a fraction of that cost. Is this dealer charge legal?

A. In a word, usually. When written on a sales agreement, “tags” implies the cost of registering the vehicle and getting a license plate—but the charge usually also includes the so-called documentation fee that dealerships impose to file that purchase paperwork. (Filing can also be done online.)

Only a few states cap permissible “doc” fees. Most don’t regulate this cost, giving dealerships a green light to hike the price. And some dealerships charge whatever they think they can get.

A better way to haggle: First, call your state department of motor vehicles to learn what it charges for tags and registration. Then, rather than negotiating a car’s “selling” price, ask the dealer about the “out-the-door” purchase price. Get specific numbers on state sales tax, tags, registration, the doc fee and other fees. As a general rule, you shouldn’t pay more than $100 for the documentation fee unless it also includes tags and registration. Edmunds.com provides a chart for calculating fair car-buying prices before you visit a dealership and can guide you on these fees in each state.

Sid Kirchheimer is the author of Scam-Proof Your Life (AARP Books/Sterling).