what fees do i pay when leasing

Leasing Fees Explained in Detail: Everything You Need To Know

The feeling of driving off in a brand new car is an exhilarating one. Thinking about all of the latest technology, the roar of the engine and that solid “clunk” of the door are all cause for excitement. Not to mention the scent of that new car smell.

The opposite of exciting? The thought of having to pay for that expensive new ride of yours. While you know exactly what your monthly payment is going to look like and you’ve already submitted a down payment on your ride, the dealership then hits you with the dreaded “taxes and fees” part of the transaction that nearly gives you a heart attack.

Immediately, you think you’re getting ripped off, because there’s no way that all of those “fees” are actually that much (or real, for that matter). That’s why it’s important to know exactly what you’re opening your wallet for, and that’s exactly what we’ll be discussing in this blog post.

Acquisition Fee

When leasing a new vehicle, you are responsible for making the monthly payments to the corresponding bank that has agreed to let you lease said vehicle.

Most of the time, each auto manufacturer has a dedicated bank that it uses to approve customers for a lease, and this comes with its own fee, AKA an “Acquisition Fee” that is charged to you, the consumer.

For example, if you lease a BMW, you will be making your payments through BMW Financial Services and will have to pay a fee of $975 in order to do so. You may be able to lease a car through an external bank to avoid paying such a high fee, but there is no guarantee that you will get the same lease deal that you would get through BMW’s preferred lender, BMW Financial Services. Since auto manufacturers set their own lease programs, they can determine which banks you will able to work with, making those bank fees essentially unavoidable. Costs are pre-set by each individual financial institution and can vary anywhere from $295 to $995.

2019 list of acquisition fees per brand

2019 list of acquisition fees/bank fees by auto brand.

Documentation Fees

No matter which dealership in the country you’re getting your car from, you’ll run into what’s commonly known as a documentation fee, essentially the fee that the dealership is charging you to process the necessary paperwork associated with your lease.

Most of these can range anywhere from $100-500 depending on the dealership. However, in some states like New York, documentation fees are capped to a maximum amount of $75 by NY state law, to help protect consumers from the sometimes extravagant “doc” fees dealerships charge.

Most of the time, doc fees can be negotiated down a little, but you’ll rarely see it completely waived all-together. If you’re getting a really good, bottom-dollar deal from the dealership, your chances of getting this fee waived are close to zero, since it ends up being a large portion of the dealership’s profit.

woman holding money

Sales Taxes

Almost everyone is familiar with basic sales tax. You make a retail purchase and you’re charged a flat, state-appointed sales tax rate. The same applies when buying or leasing a car.

When leasing a car, however, you’re only responsible for paying the sales tax on the total portion of the car you’re leasing. For example, If you’re leasing a 2019 Honda Pilot with an MSRP of 35,000 at $350/month for 36 months, you won’t be responsible for paying the sales tax on the full price of the vehicle. Instead, you’ll pay sales tax on the total payment amount that will accumulate throughout the duration of the lease.

$350 x 36 = $12,600 x 8.875% (NY sales tax) = $1,102.50 in sales tax

Certain states like Georgia and Rhode Island actually require you to pay sales tax on the MSRP of the vehicle, instead of the lease total, so make sure to check with your local DMV first to know if this is possible. In most cases though, you can either roll this amount into your monthly payments if you’re pursuing a sign and drive deal, or you can pony up and pay it at signing for a lower monthly payment. In addition, there are some states that don’t allow sales tax to be rolled into your monthly payments, so a sign and drive deal would be off the table in those cases. All in all, no matter how you’re structuring your payment, it’s important to be aware of what the tax amount will look like before you agree on a monthly lease price.

Taxes on Rebates

Obviously, everyone wants to save as much money as they can on their lease payments, and auto manufacturers are willing to go the extra mile to incentivize models they want to push off the lot. It’s a win-win for the consumer and dealership alike since the dealership otherwise would have a harder time selling units that might be over market value.

Therefore, auto manufacturers offer attractive rebates on specific models to help boost sales, meaning potentially huge savings for you, the consumer. For example, Jeep could be offering a bonus lease rebate of $2,000 on all 2019 Grand Cherokees models, knocking down your lease payments by a pretty substantial margin. Unfortunately, you’ll be on the hook for the sales tax on this amazing rebate you just received, but you’ll still ultimately save hundreds or thousands of dollars overall on your purchase after taxes.

DMV Fees

Want to get that shiny new car of yours on the road? You’ll have to make sure you’re all squared away with your local Department of Motor Vehicles first. DMV fees are mostly comprised of a few factors: the vehicle title, registration fees, license plates (new or transfer), and other processing fees that are determined by the dealership. Title fees are primarily flat, while registration fees may vary by vehicle weight, age, value, or even county, depending on which state the car is being registered in.

Alabama$18.00$23 + Depending on county
Colorado$7.20Based on vehicle age, county, and how long you've owned it
Florida$77.25$225 + $45.60/yr for vehicles over 3,500 pounds
Hawaii$0.00$45 + Weight tax
Iowa$258.00.40 x Every 100 pounds of vehicle plus 1% of the vehicles list price
Kansas$10.00Based on weight (car less than 4500 lbs is $35)
Louisiana$68.50$8 + .1% of the vehicles value
Maryland$100.00$187 For a car weighing over 3700
Michigan$15.00Depends on vehicle purchase price
Minnesota$8.25Based on vehicle age and MSRP when new (36K vehicle = $461)
Nebraska$10.00Based on vehicles cost when new (36K car = $620 fee)
New Hampshire$25.00Based on weight
New Jersey$60.00$84.00
New Mexico$3.00$27-$62 (Dependent on vehicle)
New York$55.00Based on weight ($69 average)
North Carolina$52.00$36.00
North Dakota$5.00$49 - $274
Rhode Island$51.50Based on weight (average of $56.50)
South Carolina$15.00Based on Age (under 64 the fee is 22, older than 65 fee is 20)
South Dakota$10.00Based on weight and age (average of $108)
Virginia$10.00$45.75 on average (based on weight)
West Virginia$10.00$30.00

Disposition Fees

Another fee that you’ll run into not in the beginning, but at the end of your lease, is what’s called a disposition fee.

A dealership will usually charge somewhere between $300 – $500 when you return your lease, in order to cover costs like detailing the car upon return and the appropriate preparation it takes on the dealer’s behalf in order for the car to be in selling condition.

You can avoid this fee if you decide to purchase the car at the end of the lease or you might even be able to get the dealership to waive the fee if you’re going into a newer model at lease end – another one of the perks of being a loyal customer.

Disposition Fees by auto brand

2019 List of Disposition fees by brand.


No matter if you’re leasing a Kia or a Porsche, it’s important to understand and be mindful of all of the corresponding fees that come with leasing. Financially, you can paint an accurate picture of what you’ll be putting out of pocket (if anything) and pinpoint any fees that may be eligible to be waived or reduced with some savvy negotiating.

Here at Capital Motor Cars, it’s our job to work with and negotiate with the dealership on your behalf to not only get the best deal possible on your next lease, but to break down all of the fees and work with you on your payment structure.

Our team of experienced and dedicated automotive consultants is here to make sure you have a simple, convenient and hassle-free leasing experience – without the headache of spending an entire day at the dealership.