There’s no better feeling than picking up a new car and driving it into the sunset. That is until you drive it to the DMV and see the outrageous registration fee that they’re charging you. It’s enough to wipe the biggest smile from your face.
The short answer is that a big part of your car registration fees is a percentage-based fee that looks at the car’s total value. Since newer vehicles are more expensive to purchase than older ones, they’re also more expensive to register.
It seems like every year, registration is getting more and more expensive. Why are newer cars more expensive to register than older ones? I did some digging and found out why. In this piece, I’ll answer this question and help you to understand why this happens.
What Is a Car Registration?
Car registration is a way of saying that you registered your car through your state and went through the correct paperwork. Specifically, it means paying the correct fees and taxes and successfully going through an emissions inspection and vehicle safety inspection.
This registration is the state’s way of keeping track of your vehicle. By registering your car, you have permission to use public roads in the country.
If you want a simple way to think about it, car registration is just a way to ensure your vehicle is street-legal while getting some tax money.
When Do You Register a Car?
There are a few different times when car registration is required. Here’s when:
- Buying a new or used car. It doesn’t matter how old or new the car is — if it’s new to you, then you’ll have to register it when you first get it. This applies to cars in which a loan was taken out for in addition to cars you buy upfront with cash.
- Leasing a new or used car. The same story is true for a leased vehicle. Even though you don’t own it, you still need to go through registration. Check your lease terms to see if you’re responsible for re-registration or if the lease company handles it.
- Moving to a new state. The rule of thumb is that you should get a new registration whenever you get a new state license. There are laws about how many days you have before becoming an official resident of your state, but I’d suggest just doing it as soon as possible.
- Every 12 to 24 months. Your registration is going to expire every year or so, depending on the state it’s registered to. Be sure to renew it before it expires or else you’ll get in trouble.
The Penalty of Refusing to Register a Car
If you decide that registration is too expensive, so you’ll simply not register your car, you’ll be in a world of trouble. If it’s been more than six months since your car’s registration expired, then you could get points on your license, face fees of hundreds of dollars, and even get arrested.
You don’t even need to get pulled over for these penalties. Your registration shows up when a cop runs your plates. They can just scan a parking lot and find everyone without valid registration, citing tickets to them all.
The bottom line? Register your car and bite the bullet, regardless of how new your car is and expensive the registration is.
Which Cars Need to Be Registered?
In general, any vehicle that you’ll be taking on a public road needs to be registered. There are some exceptions to this rule, like farming tractors. That’s right, you’ll probably need to register your tractor and pay a small registration fee (depending on your state).
Truthfully, some of the little details of registration will vary from state to state, but the overall idea is the same. Any vehicle that you can feasibly drive to work in the morning needs to be registered.
Cars That DON’T Need Registration
There’s a much shorter list of vehicles that you DON’T need to register:
- Off-road vehicles. ATVs, certain Jeep models, side-by-sides, and strictly off-roading vehicles can oftentimes avoid going through the registration process.
- Permanently stored vehicles. When a car becomes permanently stored in a garage, lot, or locker, then the need to register it dissolves. I’m talking about those rusty cars that gather dust until the owner decides what to do with it. Hint, hint, just scrap it for some cash in your pocket instead.
- Project cars. Until the project is over, you won’t need to register the vehicle. After all, it’s just a heap of metal before you’re done with it.
- Golf carts. These laws will vary from state to state as well, but the general law is that they don’t need to be officially registered.
- Art installations. An interesting caveat to the law is if you take a fully functioning car and turn it into an art installation where the car can’t be driven anymore, you don’t have to register the car anymore. Note: This doesn’t mean you can park your “art installation” in your garage and take it to work every day without a registration.
If you’re curious about your specific situation, reach out to your local DMV.
How to Register Your Car
Unfortunately, the only way to register your vehicle is to go through the DMV. It makes sense since a vehicle registration is simply a way for the state to know about your vehicle. Still, I hate that it has to be done through the DMV.
To avoid making multiple trips to the DMV, bring six things with you:
- Title of your vehicle
- A “Bill of Sale” if you bought it privately
- Auto insurance proof (could be an email)
- Your driver’s license
- A payment method for the registration fees and taxes
- Your vehicle
If this is the first time registering your car, you’ll probably have to go through a safety and emissions inspection.
If you’re renewing your registration, you might be able to do it online through your state’s DMV site. Again, this varies depending on where you live.
Four Things That Go Into a Registration’s Cost
After all the boring registration specifics, let me talk about the cost that goes into registration. Understanding this will help me describe why newer cars are typically more expensive.
1. State Fees
The first part of your registration’s cost is your local state’s fees and taxes. Californian readers, I’ll give you a minute to wipe the tears from your eyes before moving on.
These fees can be pretty minimal — paying something like 5 bucks a year can be expected for lower population areas of the country.
These fees go into a pool of money that’s used on a state level. It’s the same pool that your income tax goes into.
2. Car’s Value
Your car’s value will also play into the registration cost through a sales tax. Remember, a sales tax is a percentage of the total sale.
In this case, a more expensive car will cost more than a cheaper vehicle if you use the same percentage in each sale.
Other states will have a table to determine registration costs based on the car’s value. They’ll use flat rates depending on price ranges — for example, a $5 fee if the car costs $10,000 to $14,999 and a $7 if the car costs $15,000 to $19,999.
This is just another way to charge a percentage-based fee but they structure it in a way that looks a little different.
More expensive cars will generally cost more than less expensive cars when it comes to registration.
Out of all the variables of registration, the vehicle’s value makes the biggest impact.
3. Processing Fees
Who doesn’t love a good “convenience” fee? Since there’s paperwork that goes into this process, it shouldn’t be a surprise that there’s a built-in processing fee when you register your vehicle.
Like most processing fees, it is a pretty small portion of the overall payment you make. Similar to state fees, it’s usually less than $50.
4. Vehicle Weight
I was a little surprised to learn that your vehicle’s weight also changes the registration costs. Looking at New York state’s registration fee chart, a vehicle under 1,650 pounds will pay $13 per year in registration while a car over 6,950 will pay $70 per year.
I believe this difference is due to the fact that heavier vehicles will put a bigger toll on the road underneath them. This will lead to roads worsening quicker and requiring repairs sooner.
Why Are Newer Cars More Expensive to Register?
If we take a look at the previous section, there’s really only one explanation for why newer cars are more expensive to register: they have a higher MSRP.
The vehicle’s weight, processing fees, and state fees aren’t going to differ between a 2001 Honda Civic and a 2021 Honda Civic.
The big difference is the percentage-based fee that gets applied to the car’s value. In this case, a 2001 Civic sells for around $2,250 while a 2021 model retails for $21,250 on the low-end.
If you apply the same 0.65% fee to both of these vehicles (based on California’s DMV site), you’re looking at the difference between $14.63 and $138.13.
If you pick up a Tesla 3 Performance, this same fee works out to nearly $372.
The simple fact is that newer cars cost more than older cars. With percentage-based fees, this always means paying more money for more expensive options.
Remember: Keep Your Registration in Your Car
After registering your car, make sure you keep up-to-date registration in your car. If a police officer pulls you over, they’ll ask for your license and registration.
Even if your car’s registration is updated, you’ll still need the paper document proving this. If you don’t have it in your car, a cop in a bad mood can write you a hefty ticket.
Now you know all about car registration. I’ll be the first to admit that it’s annoying and might seem like a waste of money. Still, there’s no legal way around it. For more car tips, guides, and questions answered, check out the rest of my site. I also have a great list of products that will help you own and operate your car.