As a former car dealership owner, the most common question I get from car buyers is, “What is this doc or documentation fee at a dealership?“
What is a Doc Fee When Buying a Car
Doc fees, also known as documentation fees or dealer fees, are charges imposed by car dealerships to cover the costs associated with processing paperwork and documentation when you buy a car.
Dealer Documentation Fees are not upcharges!
The truth is that state law mandates the dealer handle all of the documentation on behalf of the buyer, but there is no law that says they can’t pass the expense back on to you.
These fees are usually non-negotiable and added to the final price of all vehicles, new and used.
Here’s what you need to know about doc fees when buying a car from a dealer:
Helpful Articles to Read:
- How Much Do Dealers Markup Used Cars
- How To Negotiate Used Car Price
- How Much Will Dealers Come Down on a Used Car?
- How Much Do Dealerships Make on New Cars
- How do you find out how much a dealer paid for a car?
Table of Contents
What is a Reasonable Doc Fee?
When it comes to the doc fee, what is “Reasonable” varies from dealer to dealer and also from state to state.
Some states set a max fee, like California where a dealer can charge no more than $85. But in the states with no caps, you could be charged up to $500 or $600.
In my estimation, anything around $300 would be considered reasonable, but it’s important to note that whatever the dealer charges must be charged equally to ever customer.
Is a Doc Fee Negotiable?
As I said above, dealers must charge the same doc fee to every buyer, which makes negotiating the fee itself nearly impossible.
But, what you can do is you can try to offset them by negotiating the vehicle price:
- Ask the dealer to reduce the vehicle price by the amount of the doc fee or a portion of it.
- Get quotes from multiple dealers and use the lowest doc fee as leverage.
- Be prepared to walk away if the dealer won’t budge on the total out-the-door price, including fees.
Tip: Although you can negotiate down other dealer fees, Tag and Title will not be one of them. These are to pay the expense set by the state, so you will not be able to offset the doc fee there.
Do You Have to Pay Doc Fees When You Buy a Car?
Yes, if the dealer charges a doc fee, you must pay that doc fee, or the dealer could be in violation of the law, which requires all customers to pay the same doc fee.
However, as I said above, what you can do is try to offset the fee by reducing other fees or the cost of the car or maybe adding in some sort of service or upgrade.
Avoiding Fees
The only surefire way to avoid doc fees is to purchase a vehicle from a private party seller instead of a dealership.
Private party sales don’t involve doc fees, though you’ll still need to handle the paperwork yourself, which is what the dealer is charging you for = A service.
When buying from a dealer, doc fees are an expected cost of doing business that gets rolled into the overall vehicle price.
Now let’s analyze average doc fee pricing and state regulations in more detail…
Average Documentation Fees By State
The amount buyers pay for documentation fees when buying a car varies widely state-by-state.
Highest Fees
The regions with the highest average dealer documentation charges include:
- Florida – $700
- Colorado – $550
- North Carolina – $500
- Alabama – $475
Moderate Fees
Regions with more moderately priced doc fees include:
- Texas – $200
- Michigan – $175
- Ohio – $150-$250
- Illinois – $125
Lowest Fees
And the states with the lowest average documentation fees are:
- California – $85
- Oregon – $75
- New York – $ 55
- South Dakota – $50
States With Doc Fee Regulations
The remaining 15 states do currently have laws regulating the maximum documentation charges dealerships can levy:
| State | Regulation Type | Details |
|---|---|---|
| Arkansas | Fee Cap | Maximum of $129 |
| California | Fee Cap | Maximum of $85 |
| Illinois | Fee Cap | Maximum of $166 |
| Kansas | Fee Cap | Depends on taxation method |
| Michigan | % Cap | 5% of sale price max |
| New York | Fee Cap | Maximum of $75 |
| Ohio | % or Fee Cap | $250 max or 10% of sale price |
| Oregon | Fee Cap | $115 for paper filings, $150 for electronic |
| Rhode Island | Fee Cap | $420 maximum |
| Texas | Notification System | Dealers must notify state if fees above $175 |
| Washington | Fee Cap | $150 maximum |
| West Virginia | Fee Cap | $175 maximum |
| Wisconsin | No State Cap | But fees must be deemed “reasonable” |
| Wyoming | No State Cap | But fees must be deemed “reasonable” |
The above states restrict dealer documentation charges to maximum amounts, percentages of sale prices, or require consistency and transparency in pricing.
That ensures some level of consumer protection against exorbitant hidden doc fees.
But again, focus negotiations primarily around the vehicle’s total out-the-door cost.
Other Common Car Buying Fees
Beyond documentation charges, there are a few other common fees buyers will encounter at dealerships:
- Destination charges cover shipping new cars to dealers – Typically $1,000-$3,000
- Registration/title fees pay for license plates and ownership filing – $100-$150
- State sales tax on vehicle purchase price – Typically 5-10% of sale price
- Advertising fees that some makers charge to dealers – Usually $300-$500
For the most part, those additional charges are non-negotiable mandatory fees all buyers must pay when purchasing a vehicle.
Key Takeaways: Doc Fees When Buying a Car
To wrap up, here are the key things to remember about dealership documentation fees as a car shopper:
- Doc fees cover a dealer’s back-office costs for registration, paperwork, etc. They’re legitimate and unavoidable at most dealers.
- Maximum doc fee pricing and regulations varies widely across different states.
- About 35 states currently don’t cap fees, 15 states do regulate charges in some form.
- Focus negotiations primarily around getting the best out-the-door price, including doc fees and sales tax.
- Be an informed consumer by researching state doc fee laws before visiting dealerships.
I hope this guide gave you a helpful overview explaining exactly what doc fees are and what to expect from dealerships in your state. Let me know if you have any other car buying questions!
