What Fees Will I Pay When Buying a Used Car?

You can save some serious cash by choosing to buy your next car used, and from a private seller. Just make sure you’re prepared for all the additional taxes and fees that are involved with buying a car.
From sales tax and registration fees to optional warranty plans, used car purchases come with a variety of additional costs that can quickly add hundreds or thousands to your total price tag.

Let's dive into it.

Do I Have to Pay Car Dealer Fees?

Many people believe that buying a car from a dealer will save them money. Actually, going to a dealer is more expensive as it comes with additional fees.

Dealerships charge documentation fees above and beyond all the other taxes and fees you have to pay (the other taxes and fees are exactly the same whether you buy from a dealer or a private seller, by the way). Documentation fees can be as high as $995.
Used car dealerships usually have higher prices. Their business model is built around buying low and selling high to generate the spread that allows them to stay in business. To get the best deals, avoid the middleman and deal directly with private sellers.

When you buy a used car from a private seller on PrivateAuto, you avoid the doc fee and get a better deal.

We admit that buying from a dealer provides a level of convenience that is not typically available when buying from a private seller. That is, after all, why we exist. PrivateAuto gives you dealer-like convenience while also allowing you to transact with regular people like yourself.

Cutting out the middleman unlocks major savings. Our pioneering protections, like verified IDs and secure messaging, enable private party sales with peace of mind. Buy directly from motivated sellers on your terms.

What Fees Do I Have To Pay After Buying a Used Car?

Taxes and fees vary somewhat between states, but here are the most common:

1. Sales tax
2. Title transfer and registration fees
3. License plate fees

Sales Tax

Vehicle sales taxes are part of purchasing a used car—unless you live in a state that doesn’t charge sales tax. Even then, you may still owe local taxes, excise taxes or other taxes that function similarly.

For example, at first glance, Delaware appears to be a tax haven for car buyers, as the state does not have a general sales tax. As a result, many people think that private vehicle purchases there are tax-free.

But there's a catch—Delaware charges a “motor vehicle documentation fee” on car purchases, which serves essentially the same purpose as a sales tax.

Title Transfer Fee

Once you meet the seller to close the deal and they’ve transferred the title to you, you’ll then need to complete the title transfer process at the DMV and pay the applicable fee. Contact your local DMV (or your state’s equivalent agency) for specifics.

If you want to learn more about vehicle titles, check out our detailed car title guide.

Vehicle Registration Fee

In most states, you register a used vehicle and transfer the title at the same time. This legally establishes you as the owner.

Passenger vehicle registration fees cover the costs of updating a car’s ownership in your state's DMV records. Fees vary by state; some states charge flat rates, while others calculate the cost based on factors like age and value.

In some states, the registration fee includes the cost of your license plates. But in most places, you'll pay an additional fee for your plates.

Be sure to research the requirements and registration costs for your state, as they can impact your total fees. Proper registration is mandatory for legally driving your used car purchase.

License Plate Fees

In 48 out of 50 states, you will need to pay a license plate fee when registering a used car, as the seller is required to remove license plates from the vehicle. In California and Minnesota, the license plates remain with the car and transfer to the new owner.

License plate fees help cover the production costs of your physical plates. Rates depend on factors like the vehicle's weight class and value. Personalized or specialty plates also cost more in most states.

Beyond the standard plate fee, you will pay extra fees if:

Personalized plates with custom letters/numbers
Specialty plates showcasing causes like parks or universities
Premium plates made of materials like stainless steel

Your total plate fees will vary not only based on your state and vehicle details but also on your selected plate style. Standard plate fees range anywhere from $10 to $50, depending on the state. Personalized or decorative plates can cost up to $200 on top of the standard license plate fee.

Be sure to account for license plate fees when buying a used car. You'll owe these mandatory DMV charges in almost every state.

What is The Best Payment Method When Buying a Used Car?

What if there was a smooth, digital way to pay strangers instantly without fees? A method as sure as a suitcase full of bills, but without the hassle and risk of physical cash.

Say goodbye to paper cash, checks, ACH transfers, and every other payment method. It’s time for you to learn about the best way to pay for private-sale cars.

What is PrivateAuto Pay?

PrivateAuto Pay is our integrated payment solution. It’s a core part of the PrivateAuto transactional marketplace, and it’s like nothing you’ve seen before.

Fee-free payments up to $1M.
Instantaneous payments enable real-time deals—no waiting or coordination. Close the deal when you meet for the test drive.
Instant payments work 24 hours a day, 365 days a year. No coordinating around banker’s hours.
Easily move money from your bank account to PrivateAuto Pay and vice versa. An instantaneous balance transfer can be done 24/7/365.
No exchange of contact or banking info—your sensitive information stays safe, protecting you from scammers.
Encrypted data protects you from hackers.
Escrow-like safeguards eliminate the need for an escrow service, so you can save money.
You can even buy a car remotely if you find your perfect vehicle in another state (and then arrange for transport right within our app).
Use PrivateAuto Pay for your transaction even if you met the seller on another site, such as Facebook Marketplace or Craigslist. Just invite them to our DealNow fast-track solution and enjoy the power of PrivateAuto Pay and our other transactional features.

How Does PrivateAuto Pay Solve Payment Issues?

With PrivateAuto Pay, you can ditch cumbersome bank wires and pay instantly, safely, and conveniently right from your smartphone.

No more coordinating multiple transfers due to strict limits. No more aligning with banking hours or long processing delays. Just seamless, instant digital payments between verified accounts, 24/7.

Transfer large sums securely in seconds without exposing your personal account information. Enjoy escrow-like protections without any third party fees.

Whether transacting in-person or buying a car in another state, PrivateAuto Pay is the smartest way to pay private sellers. You can act decisively on a great used car while keeping your money secure.

What are the Tax Implications of Buying a Used Car?

There aren’t a lot of tax implications when buying a car.

Here’s what you need to know about tax implications for vehicle purchases in a general sense. Always do your research on your state’s requirements, as they may vary.

No income tax. A car purchase is not taxable income, so no income taxes are owed.
No gift taxes. Even gifting the car to someone later does not generally incur gift taxes unless it's a very expensive car. Individual state rules may differ
Sales tax. You will owe applicable state sales tax on the purchase price. The rate varies by state but averages 4% to 7% of the car's value.
Private sellers may not collect tax. You will need to formally self-report and pay sales tax to your local DMV when you register the car.
Sales tax exemptions: research what exemptions are available in your state. Some states waive tax if a transaction is between immediate family members, or if the registrant is a religious organization, government body, or some other exempt status.

What Is The Best Place To Buy A Car From A Private Seller?

There are many places you can buy a vehicle, but they don't give you the transactional features to get the deal done safely, securely, and inexpensively like PrivateAuto does.

Here are some popular platforms for buying used cars online:

eBay Motors
Local classifieds sites (for example, KSL Cars)
Facebook Marketplace

These are all “meetingplaces” rather than true marketplaces; they connect you to the vehicle owner but don’t give you the transactional infrastructure to get the deal done.

We are the only transactional marketplace that offers a full suite of tools that let you get the deal done quickly, securely, and easily

Here's how we stand out from our competitors:

Verified users for trusted transactions.
Private in-app messaging with sellers.
Schedule vehicle transport within the PrivateAuto app
Eliminate the need for an escrow service.
Send instant offers on any vehicle.
Secure transfers of up to $1 million, instantaneous and fee-free
Shop for used car warranties and get warranty coverage
In-app test drive scheduling and document signing.
Complete purchases remotely without meeting in person (perfect for out-of-state transactions).
Apply for competitive financing from lending partners.
DealNow feature to fast-track a deal using PrivateAuto infrastructure.
Encrypted info protects your data from hackers
Shop auto insurance quotes and get coverage right within the PrivateAuto app

We don’t hate these “meeting places” at all. In fact, if you find a car on one of them and want to buy it, you can still use our transactional infrastructure to get the deal done. Simply invite the seller to our DealNow fast-track feature to enjoy the security, privacy, and immediacy of PrivateAuto Pay and our other features.

How Do I Buy a Car With PrivateAuto Pay?

PrivateAuto Pay makes purchases simple and secure.

1. Browse used cars for sale by owner on PrivateAuto (or even on another site). Find the one you want to buy.
2. Fund your PrivateAuto Pay account. You can initiate an instant funds transfer from your bank anytime. No limits on transfer amounts. If you need to get a loan for your car, you can do so right in the PrivateAuto app. Once approved, the lender will fund your PrivateAuto Pay account.
3. Meet the seller via our in-app scheduler—without ever giving out personal info such as email or phone number.
4. Review your in-app bill of sale, financing terms, and other documents. Digitally sign them in the app. The seller signs them as well, and you get a notification when they have done so. Once you and the seller have electronically signed the bill of sale, they are legally obligated to transfer the title to you after receiving your payment.
5. Once you receive the notification that the seller has signed the bill of sale, approve payment. PrivateAuto Pay will instantly transfer the funds to the seller’s PrivateAuto Pay account.
6. The seller transfers the title to you and gives you the keys.
7. Drive away in your new-to-you car with a binding record of the entire transaction stored in your PrivateAuto account.
8. Complete the title transfer at the DMV, and get new license plates and registration.

Found a car you like somewhere else? We got you! Use our new DealNow feature to fast-track a transaction with our infrastructure, even if you met the seller on another platform like KSL Cars.

DealNow uses PrivateAuto Pay for payments and offers all the same conveniences, along with a fast-tracked deal flow. It not only bypasses the car shopping, messaging, and negotiation steps, saves money by eliminating the need for an escrow service but you can also pay for the car on the weekend.

Find your Dream Vehicle on PrivateAuto

Here’s the PrivateAuto car buying process, and how we make it easier.

1. Browse used cars for sale on PrivateAuto.
2. Look at the top of the page for the "Filter by Location" button. There, you will enter your desired location.
3. Set a search radius, such as 25, 50, or 100 miles.
4. You can make your search even more specific by using a wide range of filters, such as the year, the price range, the trim, etc.
5. When you click "Search," a list of all the cars that match your search criteria will appear.
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Want to sell your car? Create a listing on PrivateAuto and connect with buyers today!

FAQ on Fees You Will Pay When Buying a Used Car

What is better, paying by check or cash?

Many buyers prefer a cashier's check for payment rather than paying for a car with cash. A cashier’s check seems more certain than a personal check for transferring funds. However, unless you’re standing in front of the issuing bank during business hours and they verify the funds, the seller—if they're smart—won't see it as foolproof. Criminals have forged counterfeit cashier's checks to con sellers.

To be absolutely sure your cashier’s check is valid, some sellers wait for it to clear their bank before releasing the title. This puts pressure on you to pay a large sum while trusting the seller to sign over the car later. It also means meeting twice, which is inconvenient.

PrivateAuto is safe, instantaneous, and guaranteed. With PrivateAuto Pay, funds instantly appear in the seller’s account, unlike a cashier’s check. The entire transaction can be concluded when you meet for a test drive.

While cashier's checks are a step up from personal checks, they’re not all that great. For convenience and instant, guaranteed payments, use PrivateAuto Pay.

Is PrivateAuto Pay secure?

What if I can't afford to pay the full amount in cash?

Does PrivateAuto offer plans for loan payments?

How do I avoid scams when buying a used car from a private seller?

What paperwork is needed to buy a car from a private seller?