The vehicle registration notification came in the mail today — but I expected this. The amount on the bill to register the van we bought in January was a bit of a shock to the system, however. Before purchasing our new family car, we owned the same 2 vehicles for almost ten years. The yearly registration fee for them was $99, and had been so for as long as we could remember.
But this time, the registration for our new van was $342.
The fee for our van’s license tabs wasn’t something we’d given much thought to when we were buying our new car. It was a once-a-year type fee, so we just figured we could easily deal with it when the bill arrived. Unfortunately, coming up with several hundred dollars extra was a bit of a difficult task.
Don’t Be Surprised By the Bill
We could have avoided this shocking bill, if we better understood how license registration fees were calculated, how much they cost, and then planned ahead by saving enough money to pay it.
So how does your state calculate vehicle license registration fees?
The method used to calculate the vehicle license fee is determined by the state you live in, but generally falls under a few major categories:
- Age or Value of Vehicle: This is the category my great state of Minnesota falls into. The newer and more expensive your vehicle, the more your license registration fee is.
- Weight of Vehicle: Some states increase the fee as the weight of the vehicle increases.
- Flat Fee: In some states, the registration fee is the same regardless of vehicle age or weight.
To avoid being surprised by how much your vehicle registration bill is, find out how your state calculates vehicle license fees by checking out this website that lists all 50 states, and the calculations used.
Plan Ahead Before Purchasing
Before purchasing your next vehicle, make sure you understand how your state calculates car registration fees, so you’re not blindsided like we were. Knowing how much the registration fee would be wouldn’t have affected our decision to purchase the vehicle, but it would have resulted in my wife and I putting a little cash away each month, for when the license registration expired.
Dropping hundreds of dollars just to be able to keep driving my car isn’t my idea of fun, but having the money to pay for it is not only a smarter decision, but would have saved us the stress of scrambling to pay the bill.
Has this situation ever happened to you? How did you handle it? What’s the largest vehicle registration fee you’ve ever paid?
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It sure was interesting to know that there are states that charge a flat registration fee regardless of the vehicle’s weight or age. This is something that I will share with my brother who wants to have his newly purchased car’s registration done within the wee. He wants to be financially ready for the process, so I will share this with him.
I found it interesting when you said that the license fee is actually based on the state that you live in. As you said, the age of the vehicle could also play a role. This would be a good idea for me since I bought a new car since I don’t prefer commuting anymore to keep myself healthy and allergy-free. I am also thinking of shopping for a temporary license plate tag bag that I could use to keep my car’s license damage-free. Your tips will surely help me prepare my budget.
It really helped when you said that some states increase the registration fee due to the weight of the vehicle. I just moved to Wisconsin and I need to get my truck registered before the year ends. Seems like a smart idea to get it done right away no matter what the price is.
I have to be honest. When my wife and I bought a newer, used vehicle earlier this year, I didn’t even take this into consideration. Her old car cost us like $75 to put on the road, but her newer one is like 5 times as much! It wouldn’t have changed our decision, but it wasn’t even on my radar until we paid $1,000 in taxes and fees above the purchase price.
Sounds like exactly the road we took, Kenny. I tell you the truth that it will be on my mind with the next vehicle purchase! It may not influence our decision, but we have to know what the number is to plan and save for it!
I have always been paying my bills without asking a single question and literally I have never thought about it. Thanks for sharing this post. Now I know how does it work. 🙂
It’s always beneficial to know where your money is going and why, Jennifer. Knowledge is power! 🙂
A few years ago California decided to drastically increase the vehicle registration fee. I remember it was something like double what I was paying the year before, and I didn’t even change cars!
There wasn’t really anything anyone could have done though, so basically everybody just sucked it up and moved on.
At least part of the fee was tax deductible!
Wow, that’s a huge increase, David! Although I am a interested in the dynamics of such an increase…the state will increase the vehicle registration tax to generate more revenue – but since it’s tax deductible it reduces the tax revenue to the federal government. But, I suppose it’s not really that big of a piece of the overall pie compared to income tax……
The reduced taxes isn’t that bad for the federal government, because not everybody itemizes deductions. Plus, there are many who don’t even know that the vehicle registration is deductible.
My wallet didn’t thank the new tax increase though!
Michigan has thrown around the idea of raising registration fees, based on similar type formulas, as a way to raise additional money for road repairs. It’s always interesting to see, thanks for sharing this.
I’d imagine that a increase in vehicle registration taxes would be a good candidate for guaranteed revenue by the states. People are going to buy and use cars – that’s a given….so they *have* to register their vehicles. Thanks for stopping by, Money Beagle!
I’d much rather have a new tax that’s specifically tied to buying cars. This way, the state can get its revenue and consumers can’t complain since they CHOSE to buy a new car.