The Great CA Auto Purchase License Fee Rip-Off

car taxIf you’ve purchased a car in California since 2011 (especially from a smaller dealership) then you’ve probably been ripped off by $65-$200 without your knowledge.    We’ll reveal the trick that the car dealers used to separate you from your money.   The first clue is that involved the way your car dealer calculated license fees.   The second clue requires you to take a look at your auto purchase contract — it will contain the evidence of whether you were ripped off or not.

License fees are one of the government fees collected during the sale of a vehicle in California. The California Department of Motor Vehicles (DMV) lists on its website that the vehicle license fee is essentially a property tax on vehicles. The license fees are due with the annual registration of vehicle, as well as anytime a vehicle is transferred.

Since 2011, California’s vehicle license fee is 0.65% of the value of the vehicle.   This amounts for $65 on a $10,000 car.  This fee is charged against the cash price of the vehicle, prior to any other fees, accessories, or other charges.  (On the standard California form contract, this price can be found on Line 1(A)1.)   Or you can use the DMV’s own fee calculator.

If you take a look at your automobile purchase contract, you will likely see a license fee that is double, triple, or even 10 times the amount of the actual value.  In one case, we’ve documented that one customer was charged $897 for a fee that should have totaled only $19.

It is not uncommon for dealers to severely overcharge license fees, as it is an easy crime to cover-up.   It is only one line on a document covered in numbers and words. Further, license fees are a government fee, so the dealer may blame “bureaucracy” for the amount of the fee.  Moreover, a vehicle purchase contract is a complicated document. Over two feet long with hundreds and hundreds of words printed on the front and back, it is nearly impossible for the average consumer to digest all this information. Because of this, unscrupulous dealers have been able to insert fraudulent terms and charges without the consumer finding out.
But now you know.  Just check out line 1(A)1 on your auto purchase contract and do a simple math equation:  .065 times the purchase price of your car.  Or use the DMV calculator.   If those two numbers aren’t the same, then contact the Auto Fraud Legal Center and send them a copy of your purchase contract.  They’ll do the rest.

1 reply
  1. renee
    renee says:

    Great reporting. This info should be in huge red letters posted on every wall in every DMV. I’m sure CA DMV will never do this as the car registration fees are a huge scam. Could you explain why there is a flat fee to register a car in CA? And why does the cost of registration go down as the car gets older? Thanks and keep up the great work! 🙂


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