Car buying includes paperwork and extra fees: Sales tax, license, registration and title.
All new cars and used cars must be properly registered and titled before the Department of Motor Vehicles (DMV) will issue license tags. Of course, you'll have to pay state sales tax, registration and licensing fees before receiving permanent plates for your car, even if the car was previously owned. All new cars and used cars are subject to state sales tax and registration and license fees whenever they change hands.

The title is to a car what a deed is to a home: It documents proof of ownership for each car — used cars and new cars.
If you buy a new car or a used car and you finance the car, you will not get physical possession of the title. The bank or lender will hold the title until you've paid the loan in full. You can still license and register the car without physical possession of the title.

It's the buyer's headache to pay the sales tax and deal with registration, licensing and titling the new or used car.
If you're trading in your used car, the dealer will want the title to your used car and you must relinquish it along with the car after you close the entire deal. Don't hand over the title to your car until you've closed both deals — the car you're selling and the car you're buying.

If you're buying a used car — whether from a car dealer or a private party, it's prudent to run a Vehicle History Report through CARFAX.com before closing the deal.
You'll discover any title, registration, odometer problems, etc. You can even determine if your car is a lemon. The only information you need to enter to run a report on any used car is the Vehicle Identification Number (VIN).

You can even receive the following free used car reports from CARFAX.com:

• Lemon check
• Record check - this report tells you how many times the car has changed hands - a nice piece of information to know in case the dealer doesn't own up to all the owners
• Recall check
• Problem car check - this report lists problem cars in your area

Just to be safe, you might want to run your used car VIN through CARFAX.com as well.
Once you've determined that there aren't any hidden problems, you can close the deal with the auto dealer knowing that you won't stumble upon any surprises.

When you turn the title for your used car over to the car dealer, you'll sign a few papers and that's that.
When it's your turn to do the paperwork on your new car, you usually have two choices. Usually (but not always), auto dealers can collect the state tax, registration, title and licensing fees and issue you new tags on the spot. Your other choice is to deal with DMV directly.

Auto dealers generally charge fees for the entire process in the range of $50 to more than $200.
You have to figure out how much your time is worth and whether you want to squeeze that nickel of savings out of the dealer. Sometimes, spending a little extra money to save time and aggravation is worth its weight in gold, especially if you negotiated a good deal with the dealer.