10 States Where Dealers Charge the Most Fees When You Buy a Used Car

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For most consumers, the main point of buying a used car is to save money off the cost of a new one. The average transaction price for new cars was $48,510 as of April 2024, according to Kelley Blue Book.

In contrast, AutoBlog reports that average used car prices in April were $28,600. Despite the differences, many of the same rules apply when negotiating used and new car prices — including keeping an eye on dealer fees.

Common Fees

As LendingTree noted in a recent blog, some used car dealer fees you can’t avoid. These include title, tax and license fees as well as inspection/emission fees. You’ll also have to pay sales taxes on used car purchases in most states.

But some fees might be open to negotiation. Here’s a rundown:

• Documentation fee: This fee is typically charged when the dealer pulls paperwork together for your transaction, but there might be wiggle room to remove it or lower it.
• Reconditioning fee: Dealers usually inspect used cars for maintenance or appearance issues before reselling them and they might try to pass this cost on to consumers through a reconditioning fee, according to LendingTree.
• Extended warranty: If you choose the dealer’s extended warranty on top of the regular warranty (if applicable), you’ll be charged for it. Consumer Reports calls extended warranties “an investment in peace of mind that limits financial risk for a set period of time.” These might be a good idea if the used car you’re buying is a candidate for extensive repairs and maintenance, but in most cases you end up paying more for the coverage than you get back in direct benefits, according to Consumer Reports.

Here are some tips from Car and Driver on how to lower or eliminate dealer fees:

• Compare quotes among different dealersto get a better idea who has the lowest fees.
• Negotiate the price of the car to help offset the cost of high fees. Many dealers will negotiate to complete the vehicle purchase.
• Buy through a private seller to avoid certain fees that dealerships commonly charge.

States With Highest Dealer Fees

In addition, where you live can play a big part in how much you will be charged in dealer fees. An analysis conducted by GOBankingRates looked at numerous metrics to determine how much it costs to buy a used car in each state, on average.

Following are the 10 states with the highest average dealer fees for used cars:

1. Colorado: $4,498
2. Louisiana: $4,489
3. Arizona: $4,399
4. Michigan: $4,156
5. Alabama: $4,123
6. California: $3,655
7. Florida: $3,599
8. Nevada: $3,530
9. Arkansas: $3,522
10. Mississippi: $3,504

As you can see, these states are located all over the country, so if you live close to the border of one, it may be wise to comparison shop out of state for a potentially better deal.

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