Car Purchases in New Jersey: What You Need to Know

If you’re planning to buy a car in New Jersey, it’s important to understand how vehicle sales are taxed in the state. New Jersey is known for its beautiful roads and car culture, but it’s essential to be aware of the sales tax and additional fees that come with purchasing a vehicle. This article will guide you through the ins and outs of car purchases in the Garden State.

New Jersey Sales Tax on Car Purchases

When buying a vehicle in New Jersey, you can expect to pay a state sales tax rate of 7%. This tax applies to all vehicles, regardless of whether they are new or used. It’s crucial to factor in this sales tax when budgeting for your car purchase.

In addition to the sales tax, you may also be responsible for other fees such as registration, title, and plate fees. These fees vary, so it’s essential to check with the New Jersey Department of Motor Vehicles for the most accurate information.

Trade-Ins and Rebates

If you plan on trading in your old car for a new one, New Jersey law offers some relief. The value of your trade-in is not subject to sales tax, which means you can save on taxes for that amount. For example, if your old car has a trade-in value of $5,000 and you use it towards a $10,000 new car, you’ll only be taxed on the remaining $5,000.

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On the other hand, rebates and dealer incentives work differently. New Jersey taxes vehicle purchases based on the original price before any rebates or incentives are applied. So, if there’s a $1,000 cash rebate on a $10,000 car, you’ll still be taxed on the full $10,000.

Additional Taxes and Fees

Apart from the sales tax and registration fees, there are a few other costs to consider when purchasing a car in New Jersey. The Department of Motor Vehicles (DMV) adds an average of $931 in fees, covering the title, registration, and plate fees.

Dealerships may also charge a documentation fee, which covers the administrative costs involved in preparing and filing sales documents. These fees are separate from the sales tax and DMV fees and can vary from one dealership to another. The average documentation fee in New Jersey is around $335.

It’s important to note that the fees mentioned here are averages and can vary depending on the specific circumstances of your car purchase. Always check with the dealership and the DMV for the most up-to-date fees.


Q: Are car sales tax rates the same across all states?

A: No, car sales tax rates vary from state to state. It’s important to research and understand the tax rates and other fees applicable in your state.

Q: Can I negotiate the documentation fee with the dealership?

A: Yes, the documentation fee is negotiable. Don’t be afraid to ask the dealership if they can lower or waive the fee.

Q: Can I include the sales tax and fees in my car loan?

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A: Yes, most lenders allow you to include sales tax and fees in your car loan. However, keep in mind that this will increase the total amount financed and the overall cost of the loan.


Buying a car in New Jersey involves more than just the sticker price. Understanding the sales tax, trade-in rules, and additional fees will help you make an informed decision. Remember to research and compare prices from different dealerships and consult the New Jersey Department of Motor Vehicles for accurate information. Happy car shopping!

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