# How Do I Calculate How Much for a Tax, Title & License?

Auto lenders often do not figure in the tax, title and license fees when showing you your car payment. This is a crucial step as it will avoid payment shock when you receive your first auto loan statement. Once you have all the necessary figures, you can calculate these values yourself.

#### Things You'll Need

• Finance agreement (including purchase price and destination fee)
• Calculator

## Instructions

• 1

Review the purchase and finance agreement that your lender gave to you. You will need the purchase price, the cost of any add-ons (extra features not included in the price) and the destination fee.

• 2

Identify the sales tax rate for your state. You will need this information before making your calculations.

• 3

Calculate for taxes. Add the purchase price of the car, the prices of add-on features and the destination fee. Convert the sales tax percentage to a decimal (e.g. 8 percent is 0.08). Multiply the sum of the three figures by the tax rate. For example, if the sales price is \$15,000, add-ons equal \$1,000 and the destination fee is \$500, your calculation would look like this: \$16,500 x 0.08 = \$1,320. This is your sales tax.

• 4

Find out how much your state department of motor vehicles charges for titling fees. According to Edmunds.com, most state DMVs charge between 1.0 percent and 1.5 percent for to title a vehicle. To find out how much this will cost you, you must multiply the sum of the purchase price, the add-ons and the destination fee (\$16,500 in the example above) by the decimal form of this DMV rate. For example, if your DMV rate is 1.3 percent, your calculation looks like this: \$16,500 x 0.013 = \$214.50. These are the fees for title and license.

• 5

Calculate the actual payments for the car loan. Add together the purchase price, the add-ons, the destination fee, the taxes and the title and license fees. In this example, this looks like this: \$15,000 + \$1,000 + \$500 + \$1,320 + \$214.50 = \$18,034.50. Use the a car payment calculator to find your actual car payment. Use the rate and term in your loan contract.

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## Resources

• Photo Credit yellow car, a honda japanese sport car model image by alma_sacra from Fotolia.com