Getting a new car can be a fun and exciting thing.
However, there are times when getting a new car can also be quite stressful.
There are sometimes hidden fees that you are not aware of, and these can make it challenging to afford the car that you wanted or that you have already purchased.
These car registration fees are issued by the state, and they can vary in price depending on quite a few different factors.
There is no question that the fees can get expensive, and this is something that you should be well aware of when purchasing your car.
If you don’t understand what these fees are and why they are so expensive, it gets harder to justify the spending.
Here are the top 10 reasons car registration is so expensive.
Why Is Car Registration So Expensive? (Top 10 Reasons)
1. Age Of Vehicle
Car registration is based on quite a few different factors.
As we will explain, many things will determine the specific amount that you pay for registration.
Depending on the state where you live, these factors will come into play a bit more or a bit less.
One of the major factors that determine your registration cost is the age of your vehicle.
This is a tough one because, even if you are leasing a new vehicle, your car registration fees are going to be quite high.
The newer the car, the higher the registration fees are going to be.
Many people purchase new cars, and sometimes purchasing a new car through a lease is actually more affordable than purchasing an old car and having a loan on it.
Therefore, the age of the vehicle is a major factor that needs to be considered when paying for your vehicle registration.
There is nothing that you will be able to do to avoid the registration fee, but you should be aware of it when you are budgeting for your costs.
Explain to the car dealer that you are concerned about this fee.
Find out from them how the registration fee will be paid and whether or not you can put your registration fee into your monthly payments.
The problem, of course, comes when you planned on having a $199 a month car payment.
Then all of these taxes and fees get put into the mix, and all of a sudden, you are paying $229 per month.
It may not seem like a large amount at the time of the closing on the car, but over time, the extra $30 a month will add up.
Overall, the most important thing to remember is that, if you are buying a new car, you can expect your car registration fees to be quite a bit higher.
2. Value Of Vehicle
Another major consideration in why car registration is so expensive is that it takes the vehicle’s value into the equation.
When you purchase a new vehicle, most of the time, the value is quite high.
For those who have purchased something like a new truck or a new SUV, the value is going to be well over $40,000.
This is quite a large number, and it is going to significantly impact the way that the registration fees add up.
Overall, the value of the vehicle is not something that you can change, but it is also important to remember that these vehicle values are continuing to increase.
If you look at the cost of a car today compared to the cost of a car five or ten years ago, the numbers are going to shock you.
Cars have gotten so much more expensive.
Right along with the cost of cars, the price to own one has also increased tremendously.
When you purchase your car, you will be subject to so many different fees and payments that it gets overwhelming.
Keep this in mind when you are negotiating on your vehicle.
The last thing you want to do is settle on a number and then find out it is $40 more per month because the fees, warranty, and more were not calculated.
The car-buying process is tricky, and the value of the vehicle you end up with is going to impact your state car registration fees.
Do the best job you can to find a deal on a car because it’s going to impact you in more ways than one.
3. State Variations
Each state has different car registration fees.
Although you may think this is not a problem, it becomes a major problem for those who have to move often.
Keeping track of all the different fees across state lines is quite difficult.
Therefore, people need to be aware when they are moving that they are going to be experiencing different fees as soon as they get to their new destination.
Overall, the car registration fees that you pay are going to go to the state government.
They will take these funds and use them for the needs of their state.
As you can imagine, states like California, where the cost of living is extremely high, are going to charge quite a bit of money for car registration.
Almost everything that you want to do in California is priced higher than it is in other states.
The fact that there is no federal regulation over the car registration fees is partly why we keep seeing these higher amounts.
If the federal government set this in place, there would be a universal fee charged from one state to the next.
Since the state governments are in charge of these, you see much more variation in the total costs.
In the end, you need to be prepared to spend some extra money on car registration fees should you move from one state to the next.
If you are lucky, you will find out that the next state has lower fees.
If not, you may find yourself experiencing a little sticker shock when you head to the Department of Motor Vehicles.
Just remember that each state is run differently, and this is why the fees are going to vary and change.
4. Processing Fees
If you look at the breakdown of a car’s registration fees, you will notice that there are several different components to it.
As we have mentioned, the fees are based on different factors that come up across the state.
However, in addition, there are also fees within this fee.
Yes, leave it to the government to put fees within a fee.
As much as we would all rather look at a standard number that allows you to clearly see what you are paying, things rarely work that way.
When you pay your car registration fee, you are also paying a processing fee within the payment.
Chances are, when you went to the department of motor vehicles to get the car registration, you worked with a person.
That person gets your information and processes the registration.
When you leave, there are certain things they must do on their end to put your registration into the system.
As you may have imagined, there is a system in place that will make it easy for police and insurance agencies to check and see if you have a registration in place on your car.
This is why there is a processing fee.
The actual process of getting your car registration activated and putting it into the system will cost some money.
However, in addition to this car registration fee, there are also flat fees involved in this process.
5. Flat Fees
As we mentioned, paying the processing fees for registration is frustrating.
However, in addition to these processing fees, there are also flat fees that must be paid.
A flat fee is a basic rate that the state charges for the registration.
This is the money that will end up in the hands of the state that essentially gives you access to the roads that you drive on.
The flat fee is the bulk charge when you register your car.
Sometimes states will change this flat fee, and it will likely come without much warning.
This means that every time you register your new car, the fees are going to vary quite a bit.
If you remember correctly, the age of the vehicle and the total price also came into play.
This means that those factors combined with the processing fees and the flat fees all add up to make one expensive vehicle registration.
These high expenses become difficult to afford, and some people find that it can make or break their decision about whether or not to buy a car.
The taxes that you are charged on the purchase of a new car are another area to keep in mind as this can add thousands to the price you pay for your vehicle.
Overall, the different components and the calculating factors in a car registration certainly increase the prices that are paid.
6. It Is A Tax
Your car registration is essentially a tax.
The tax that you pay through the state is probably quite a bit higher than you would like them to be.
State governments subject their residents to taxes just like the federal government does.
There is no way to get around having to pay taxes because it is something that, as Americans, we are used to.
The car registration fee that you pay is essentially a tax.
This tax allows you to drive on the roads in the state, and therefore, the state government will be able to maintain the streets a bit better with the money that is submitted.
Whether or not this is precisely where the money goes is a bit hard to tell.
However, the taxes are usually quite high when you look at overall living costs in a state.
Therefore, the fact that the registration is really a tax payment means you can expect to pay quite a high amount.
The overall tax burden on an individual each year can vary, but the car registration fees never seem to go down.
We don’t expect this to change anytime soon, so you can expect that your fees will continue to increase as time goes on.
The only thing you can do about this is to save up and be prepared for the change.
7. Paying For Road Use
What would you do without the use of the roads?
Most of us would be lost because that is how we get from one area of the state to another.
If you think about it, the roads are a huge part of our infrastructure and what makes a state work.
Pulling out of your driveway, you probably rarely think of the convenience of having a road there for you to use.
The car registration fees that we pay are put towards keeping the roads in good shape for us to use.
Of course, there are still some roads that have additional tolls, but for the most part, you won’t pay to drive on any of the roads in your local area.
This payment is made when you register your car to have access to the roads.
Looking at the big picture and realizing that your car registration fee is essentially what has allowed you to be able to drive around is a major factor.
The next time that expensive car registration fees leave you feeling a bit overwhelmed, think how you would feel if you didn’t have access to the roads.
Most of us have built our lives around being able to take roads to and from local stores, restaurants, and workplaces.
Without this access, it really wouldn’t even be worth it to own a vehicle.
8. Having A Vehicle Is Considered A Luxury
Have you noticed that everything about owning a car is getting more expensive?
From a car wash to gas to car insurance, the prices will never go down.
These prices continue to increase over time, and it has everything to do with the fact that owning a car is a luxury.
If you own a car, you are considered to be one of the lucky ones.
Many people cannot afford a vehicle, and they will rely on public transportation.
Of course, public transportation has its own flaws when it comes to expenses, but it is still cheaper than owning a car.
The fact that cars are optional is starting to become more and more apparent.
It is making many people question the need for owning a car altogether.
With more and more delivery services, remote workers, and even Uber drivers that can take you places when you really need it, sometimes it makes more sense not to own a car at all.
When it comes to fees and expenses, you are almost always going to see higher rates on things that are a luxury or a choice.
The fees and expenses for things that are necessary for living are typically quite a bit lower.
The prices that you pay for owning a car are making many reconsider whether this is a smart choice for the long term.
Certainly, we can understand why many households have gone to just a one-car home.
9. Fees Used To Pay For Other Needs From The State
As you can imagine, it is quite expensive to run a state.
The amount of money required to take care of the buildings, roads, and people is incredibly high.
This means that the state must figure out ways to collect money from the residents so that they can use it to properly care for the state.
Unfortunately, that leaves many residents of the state having to pay different fees and registrations to cover these expenses.
It is no secret that some states are cheaper to run than others.
If you don’t have the proper money coming in, states will go into debt, and this becomes a large issue for the people who live there.
There will be unsightly areas in the state and even some dangerous conditions on roadways.
The way the state comes up with the money to take care of it is by collecting from the people.
When you pay your car registration, you are essentially buying access to the road, but that money can go anywhere within the state.
This means that whatever the current issues are in the state, the money will be allocated towards that.
Registration fees will sometimes change based on the state’s needs, and as a vehicle owner, you will never really know where these fees are going.
The expensive prices you pay are probably going to take care of quite a few different things within the state, and that is why we never see a decrease in these fees.
There are always issues to be taken care of, and it takes some overall understanding of the government to figure that out.
10. People Are Willing To Play
Last but certainly not least is the fact that people are willing to pay for car registration.
As you have likely figured out in the past, as long as people are continuing to pay for something, you will rarely see a decline in the price.
We all like to complain about the car registration fees that we are subject to, but did they really prevent you from purchasing that new car?
Chances are the answer is no.
When people set their mind on something they want, like a new vehicle, it is rare that anything will stop them from completing the purchase.
If your purchase ends up being a bit more than you expected, it is unfortunate but likely not enough for you to turn in the keys.
Until people stop registering their vehicles because the prices are too high, we are likely not going to see a change or a break in the fees.
States have you in a good position because they know that you are going to pay to register your car.
After all, without the registration, it is not even legal to be driving on the road.
Overall, the fees that you pay for these types of issues make this entire process less enjoyable, but they won’t stop you.
The day that car registration gets so high that you decide to walk to work or take the bus, you will likely see that the price increases start to come to a halt.
Until then, the state government feels as though it is collecting more than enough money from those who are willing to pay.
The truth is, they are.
So many cars are registered daily that you will not have much of a case in getting the state to lower their fees.
The best thing you can do is be prepared for these numbers and make sure you have budgeted for them.