What are Car Dealership Documentation Fees

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Before you Sign on the Dotted Line…

If you are buying a car, the process of finding the car you want is the first major hurtle. Then you have to agree on a price with the dealership, and after that, you sit down to go over all the paperwork (and there is a lot of paperwork), before placing your name on the dotted line and handing over your down payment before you drive off in the car of your dreams.
 
But what's this? You notice a number of "fees" in your contract and the price of your total deal is a bit more than the price you agreed to. One of these fees is usually marked a documentation fee or "doc fee." Dealerships add on a charge that can be several hundred dollars. But what exactly is a doc fee? What is it for? Do you have to pay for it? Is it negotiable? Lithia Motors has the answers.

I didn't see a Doctor!

No, your doc fee has nothing to do with seeing a doctor. Rather, it is the amount the dealership charges you for handling all the detailed paperwork and for filing your new car with the state in order to get it registered and to get license plates. It covers the cost of dealership employees who work specifically with your car's title fee, registration fee, and the Department of Motor Vehicles (DMV). It also covers costs for finding out what your trade-in is worth, etc. Some consumers see this charge as unreasonable. But if you've ever spent the day at the DMV, you know it's not.
 
The amount you are charged for doc fees depends on the state in which you live. Many states don't regulate what a dealer charges you for doc fees. In those states, the doc fees tend to be higher. Remember that this fee is revealed when you are going over the final paperwork. Many people are surprised by this charge that can range anywhere from $60 to $400. And there are other charges added to your total amount seen on the contract.
 Besides taxes, the dealership adds on any special services or contracts that you will have agreed to. These can include extended warranties, extended maintenance programs, subscriptions to Sirius radio, Android Auto and Apple Carplay. There are key protection programs, windshield protection programs, tire protection, dent protection, car alarms and trackers, GAP insurance coverage, paint sealants, fabric protection, and the list goes on. You have to accept or reject these sorts of services and programs before you accept the final contract.

Doc Fees by State

In 35 states, there is no law regarding how much a dealership may charge for a documentation fee. Therefore, there is no average doc fee. Here are the top ten states that have the highest dealer doc fees. Florida charges the most at $607, followed by Colorado at $508, Georgia at $502, North Carolina at $466, and Alabama at $458. Other top contenders include Nevada at $431, Virginia at $403, Tennessee at $402, Arizona at $401, and Wyoming at $388. The states with the cheapest doc fees include South Dakotas at $93, Minnesota at $75, New York at $74, Oregon at $61, and California at $55.
Remember the Bottom Line
While we all have to pay doc fees when purchasing a car, there are ways to negotiate a better deal. Look at the bottom line number on your contract. This is your final cost with everything all in. This includes the purchase price of the car, any services you would like to add, taxes, and the doc fee. Your bottom line number can be negotiated.

Tell the dealership that you want to deal with the "out the door" price on the vehicle. This price includes the doc fee. Focus on the price you will be paying overall, the total cost. Let's say that you are planning on spending a total of $35,000 on a car. You have been pre approved by your bank for that amount and you are prepared to spend that at your dealership. Tell the dealership that $35,000 is your maximum "out the door" price, the total price that you are willing to pay. That is your line in the sand that you will not cross. After that, it doesn't matter to you what the dealership charges for doc fees or any other fees associated with your deal.

When looking at your final contract, be sure to ask your sales associate if ALL FEES have been mentioned and are included in your final figure. You don't want to be caught at the last minute with any extra fees that jack up the price.

Ready to Sign?

So, we've established that dealership documentation fees cover handling all the paperwork, making sure liens are recorded, filing for the title and registration, and getting your license plates. This is important because one tiny error on your paperwork can cause it to be kicked back. Dealerships know this and are experts at making sure all the details of the sale are done properly.

When you consider all the work that goes into dotting all the "i's" to register your car, it is well worth paying the dealership the doc fee. However, if you get all the way to sitting down with the car dealership's finance officer and still don't know what you are being charged for a doc fee, be sure to find out before you sign the paperwork. You can still negotiate that all-important "out the door" bottom line price.