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What is a Doc Fee When Buying a Car

What is a Doc Fee When Buying a Car

As a former car dealership owner, the most common question I get from car buyers is, “What is this doc or documentation fee on my sales contract?

Below, I’ll explain everything you need to know about Doc Fees, including if they are legal and if they can be negotiated down.

I’ll also touch on other common dealer fees and how to deal with them.

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What Exactly Is A Documentation Fee?

A documentation fee, often shortened to “doc fee”, is an administrative charge levied by car dealerships to buyers to cover the back-office paperwork, processing, registration, and compliance costs involved when purchasing or leasing a vehicle.

Essentially, it helps pay the salaries of finance employees who handle all the title transfers, registration filings, tax paperwork, license plates, lien releases, and DMV document requirements when you buy a car.

So, while annoying, doc fees are legitimate operational costs incurred by dealerships.

However, they tend to surprise buyers since they’re not revealed until the final sales negotiations.

Are Documentation Fees Negotiable?

The negotiability of doc fees primarily depends on individual state laws:

  • In 35 states, there are no regulations on the amount dealers can charge. Fees in those regions tend to run higher on average.
  • In other states like California and New York, maximum doc fees are capped by law between $55 to $85 on average.
  • Some states moderately limit fees to around $100 to $300.

However, just because a state doesn’t regulate doc fees doesn’t mean you can’t negotiate them:

  • Argue that higher documentation charges offset your savings on the vehicle price.
  • Shop dealer-to-dealer fee comparisons to argue for a lower charge.
  • Remember, the focus should be negotiating the total out-the-door price. Whether the dealer charges you less on the doc fee itself or another area, getting a great bottom line deal is what matters.

Now let’s analyze average doc fee pricing and state regulations in more detail…

Average Doc Fees By State

The amount buyers pay for documentation fees when buying a car varies widely state-by-state.

Highest Doc Fees

The regions with the highest average dealer documentation charges include:

  • Florida – $700
  • Colorado – $550
  • North Carolina – $500
  • Alabama – $475

Moderate Doc Fees

Regions with more moderately priced doc fees include:

  • Texas – $200
  • Michigan – $175
  • Ohio – $150-$250
  • Illinois – $125

Lowest Doc Fees

And the states with the lowest average documentation fees are:

  • California – $85
  • Oregon – $75
  • New York – $ 55
  • South Dakota – $50

Now let’s analyze the doc fee laws and regulations in each state category…

State Doc Fee Laws & Regulations

The majority of US states—35 to be precise—currently do not regulate or cap the maximum doc fees car dealerships can charge.

That means dealers in those regions can decide their own documentation pricing. And on average, they tend to charge higher rates since there are no legal constraints.

However, 15 other states do regulate doc fees charged by dealerships operating in their regions. Common forms of regulation include:

  • Fee caps – Maximum charges ranging from $55 to $250
  • Fee limits – Doc fees restricted to a percentage of vehicle sale price
  • Consistent pricing – Same doc fees must be charged to all customers

Now let’s break down states with and without doc fee regulations in more detail…

States With No Doc Fee Regulations

The following 35 states currently have no laws capping or restricting the maximum documentation fees car dealerships can charge:

  • Alabama
  • Alaska
  • Arizona
  • Colorado
  • Connecticut
  • Delaware
  • Florida
  • Georgia
  • Hawaii
  • Idaho
  • Indiana
  • Iowa
  • Kentucky
  • Louisiana
  • Maine
  • Maryland
  • Massachusetts
  • Minnesota
  • Mississippi
  • Missouri
  • Montana
  • Nebraska
  • Nevada
  • New Hampshire
  • New Jersey
  • New Mexico
  • North Carolina
  • North Dakota
  • Oklahoma
  • Pennsylvania
  • South Carolina
  • Tennessee
  • Utah
  • Vermont
  • Virginia

With no legal constraints, doc fees in those regions can vary widely dealer-by-dealer. But typically fall on the higher side compared to regulated states.

Shoppers in regions without fee regulations will need to carefully negotiate pricing on a case-by-case basis.

States With Doc Fee Regulations

The remaining 15 states do currently have laws regulating the maximum documentation charges dealerships can levy:

StateRegulation TypeDetails
ArkansasFee CapMaximum of $129
CaliforniaFee CapMaximum of $85
IllinoisFee CapMaximum of $166
KansasFee CapDepends on taxation method
Michigan% Cap5% of sale price max
New YorkFee CapMaximum of $75
Ohio% or Fee Cap$250 max or 10% of sale price
OregonFee Cap$115 for paper filings, $150 for electronic
Rhode IslandFee Cap$420 maximum
TexasNotification SystemDealers must notify state if fees above $175
WashingtonFee Cap$150 maximum
West VirginiaFee Cap$175 maximum
WisconsinNo State CapBut fees must be deemed “reasonable”
WyomingNo State CapBut 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!

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Steve Momot - Author

Steve Momot - Author

Steve, a seasoned expert in the automotive industry, formerly held a car dealer license in Florida. With extensive experience spanning across car trading and mechanical work, he founded Autohitch. His mission? To guide both buyers and sellers through the intricate maze of car purchasing, ensuring a seamless and informed experience. Outside of the automotive world, Steve has a passion for fishing and capturing the beauty of nature through photography.

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