Pen in hand, you review the sales contract before signing for your new car. It all looks good except for one mysterious figure: the documentation fee or "doc fee." In some states, this will be less than $100. But in others it can be higher than $700. What, exactly, are you getting for your money? And do you really have to pay this fee?
The dealer charges a documentation fee in exchange for filling out and filing paperwork for your new car. To be fair, this is a complicated process involving many different forms. If you're car shopping, you should know how your state handles the doc fee. In 10 states, state government limits the doc fee. The good news is that the limits are pretty low, such as the $80 doc fee charged by California dealers. You can find the fee in your state on this chart.
If your state's government doesn't limit the doc fee, the amount is left up to the dealer's discretion. And there will be significant variation among different dealers across the state, so it's good to ask, early in the process, what the dealership charges. In many cases, all the dealers in the same area charge the same doc fee. To see a bigger difference, search in a neighboring city.
This chart lists the estimated average amount that dealers charge for doc fees in each state, based on figures provided to Edmunds by the thousands of dealers nationwide participating in our Price PromiseSM program. It provides an idea of what a dealership may charge you.
Florida has the highest average doc fee, calculated by Edmunds.com to be $675, but some Florida dealers charge as much as $999. The second highest state for doc fees, according to Edmunds data, is North Carolina, at an average of $550. Among the states that put no limit on doc fees, Arkansas has the lowest average amount: $110.
Car shoppers can ask if they can negotiate the doc fee or take it out of the contract completely; however, this can be time-consuming and probably stressful for the shopper. Granted, the dealer sets the fee, so theoretically the dealer could lower it or waive it, but this is unlikely.
Instead, if you know ahead of time that the dealership charges a hefty doc fee, you can either shop at a different dealership or ask for a deeper discount for the car. When it comes to pricing, there are many moving pieces behind the scenes that are out of your control. Instead, pay attention to those pricing elements that you can affect, such as the purchase price of the car, interest rates of loans and the cost of the extras, such as extended warranties, that may be offered to you in the finance and insurance office. Keep it simple and make a lower starting offer in your negotiations.
Also, keep in mind that the differences among doc fees at different dealerships might be just a few hundred dollars, while smart shopping and negotiating could save you far more than that. So it's not worth losing sleep over doc fees, however annoying they may seem to you. If you know ahead of time how to handle this issue, you won't flinch when it comes to signing the document.
To find a dealership that knows how to treat shoppers right, please visit Edmunds.com's Dealer Ratings and Reviews.