What Is a Documentation Fee for Buying a Car?

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.

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.

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.

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.