What Is a Dealer Handling Fee, and Is it Negotiable?

There are many fees associated with buying a new car that goes beyond the price of the car itself. You have to factor in sales tax, registration fees, and any other fees associated with the sale. Sure, there are some fees that you shouldn’t have to pay. However, in some states, car buyers will notice one charge called a “dealer handling fee.” But what is that fee, and is it negotiable?

A new car's window sticker
A new car’s window sticker. | Jeff Gritchen/MediaNews Group/Orange County Register via Getty Images

The dealer handling fee is essentially the same thing as the documentation fee

A customer talks with a sales consultant.
A customer talks with a sales consultant. | J. Conrad Williams Jr./Newsday RM via Getty Images

The “dealer handling fee” is also known as the “documentation fee” in some states. They’re essentially the same thing, and sadly, they are not negotiable. Car buyers will find the dealer handling fee on every car deal. However, the amount can change depending on the state in which the car is purchased.

According to YAA, “some states (like California and New York) cap the doc fee while others do not.” For example, the average doc fee in California is $85, and the highest buyers will see on their pricing sheet. However, other states like Georgia have an average doc fee of well over $500. Colorado has an average fee of $495, and this line item is typically called a “dealer handling fee” in that state in addition to others.

This fee takes care of the paperwork and other electronic filings needed on the DMV side of the process. Although dealers can’t take that fee completely off the total price, as it’s mandatory by law to charge every customer equally, buyers may be able to get the price of the car reduced to compensate for the fee.

Which dealership fees are negotiable?

Although the sales tax, documentation fee, and DMV registration fees are necessary for every car purchase, there are some fees that are not. According to Credit Karma, the following fees may be negotiable on a car purchase:

  • Advertising fee: The dealership may try to charge you for the cost of advertising the car. Although it may sound reasonable to some, try to avoid paying whenever possible.
  • Dealer preparation fee: Some dealers will try to charge customers for washing and prepping the car.
  • Transportation fee: If the car you want is at another dealership, the one you’re working with may try to charge you for the cost of transporting it to their store.
  • Extended warranties: You may be offered an extended warranty when purchasing a car. If you opt for it, keep in mind its price is negotiable.
  • VIN etching: Some dealers will offer to have the car’s vehicle identification number (VIN) etched into the car’s windshield in case it gets stolen. Considering the VIN can be found on various parts of the car, VIN etching may not be worth it.
  • GAP insurance: Guaranteed Asset Protection (GAP) covers the difference between your loan amount and the car’s value in the case of a total loss accident. We recommend purchasing it; however, remember that its price is negotiable.

Pay close attention to the fees when you buy a new car

A couple looks at a brand new Porsche Cayenne in a car showroom.
A couple looks at a brand-new Porsche Cayenne in a car showroom. | Kaveh Kazemi/Getty Images

The next time you buy a new car at a dealership, remember to pay close attention to the fees on the price sheet. Although the price of new cars may not be as negotiable as they were a couple of years ago, there are some fees that can be reduced to save you some money. Unfortunately, the dealer handling fee is not one of them.

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