My Car Dealer Charged Me A Documentation Fee: What’s That?

Did you just buy a new or used car with an extra charge called a “documentation fee?” Sometimes called a “doc fee” it is an added charge to the car you’re buying. It is another one of those oblique dealership charges that add several hundred dollars to the price of a car. But it is also a charge that seems arbitrary at best. Do you have to pay for it? Can you negotiate it?

The documentation fee is also called a “service” or “handling charge”

The doc fee is also called a “service” or “handling charge.” In California, it is called a “document-processing fee.” In the past, it has been described as a fee to cover having to deal with the government. So this takes in digital filing, administrative paperwork, and any other part of the sale process. 

Dealerships can sometimes employ several people to handle these administrative activities. So there is some cost involved for the car dealer. These employees help process the registration, title, and other functions of motor vehicle registration. But shouldn’t the process of registering a vehicle be baked into the price and not separate?

Dealership Service Department customer
Dealership Service Department | Getty

Some feel that as you don’t pay the painter on the assembly line separately, or the person that puts air in the tires, you shouldn’t have a separate charge for the person that handles its registration. That should be factored into the price negotiated for the car.

State laws require dealers to charge equal documentation fees to each customer

Some states like California have a cap that dealers can charge customers. But most states don’t. Because the law requires dealers to charge equal amounts to each customer for the same charge or service the fee is not negotiable. So rather than focus on lowering the doc fee you should pay attention to the bottom line. That is the final price you are paying for the car.

You can suggest that the dealer reduce the price you pay to compensate for the extra fee. And that fee can run anywhere on average from over $600 in Florida to only $55 in California. That $55 is the most allowed by the state that dealers can charge for document fees. 

The five states with the highest doc fees according to Autolist are Florida, then Colorado at $508, Georgia at $502, North Carolina at $466, and Alabama at $458. In comparison, the five states with the lowest doc fees are California, then Oregon at $61, New York at $74, Minnesota at $75, and Arizona at $97. 

A red 2021 Chevy Corvette sports car parked inside a car dealership in Colma, California, on Monday, February 8, 2021
A Corvette Stingray for sale at a car dealership in Colma, California | David Paul Morris/Bloomberg

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Use competitive pressure to get dealers to offer a lower overall price

If you comparison shop you can get quotes from two or more different dealers for the overall price of the vehicle you want. This works in your favor. You can use competitive pressure to get the dealers to offer a lower overall price to get the sale. 

Make sure that you get those quotes with all of the extra fees included. There are other mirky fees that get added like Destination fees, Regional Ad fees, Dealer Prep fees, and straight-up Additional fees-which could be almost anything. Get the salesperson to lump them together and then work to lower that figure.