What Is a Documentation Fee for Buying a Car?

Ask the dealership to explain its documentation fees before signing the contract.

Ask the dealership to explain its documentation fees before signing the contract.

If you have ever haggled over the price of a new or used car, you already know what a draining experience it can be. Tiring negotiations, however, are well worth getting a good deal on the car you want. Unfortunately, the price you and and dealership agree on isn't always the final price. Car dealership fees, such as documentation fees, can take a sizable chunk out of your savings -- leaving you back at square one.

Documentation Fees

Documentation fees, often referred to as “doc fees” or “processing fees,” generally cover the cost of registering the vehicle in your name and processing any additional documents. The exact products and services documentation fees cover may vary by dealership. A 2011 automotive fees survey conducted by the state of Massachusetts revealed that documentation fees can cover everything from the cost of a tank of gas to preparing the vehicle for sale.

Amount

The documentation fees different dealerships charge vary just as much as what the fee itself covers. These fees can range from below $50 to hundreds of dollars, depending on where you purchase your vehicle. Consumer Reports notes that $50 or less is a fair charge for processing documents, and that consumers should question any dealership whose documentation fees exceed $100. Some states have fee ceilings in place to protect consumers from inflated fees. In California, for example, dealerships cannot charge more than $80 in documentation fees. Your state's department of motor vehicles can inform you if your state has documentation fee limits in place and, if so, what those limits are.

Negotiating Documentation Fees

Most aspects of your purchase transaction are negotiable and while you shouldn't count on getting a documentation fee dropped, you may be able to negotiate portions of the fee. First, find out exactly what the fee covers and how much your state charges to register a vehicle. You may not be able to get the fee waived, but you can attempt to negotiate any charges above what your state charges for registration.

Considerations

After a tough afternoon of negotiating the price of your car purchase, you're tired, you're frustrated and you just want to sign the necessary paperwork and take your new car home. Giving in to your fatigue, however, could prove to be an expensive mistake. When the dealership gives you your contract to review, its crucial that you read it thoroughly, run the numbers yourself and question any suspicious fees before signing on the dotted line. Also watch out for duplicate fees. If, for example, your contract contains a documentation fee and a processing fee, the dealership may be charging you twice for the same service. Remaining vigilant helps you avoid becoming the victim of a dishonest salesman or a simple accounting error.

 

About the Author

Ciele Edwards holds a Bachelor of Arts in English and has been a consumer advocate and credit specialist for more than 10 years. She currently works in the real-estate industry as a consumer credit and debt specialist. Edwards has experience working with collections, liens, judgments, bankruptcies, loans and credit law.

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