Doc Fee Quick Facts When Buying a Vehicle
- A doc fee is typically charged to car buyers by car dealerships to process a vehicle’s paperwork.
- Many states in the U.S. don’t regulate the amount of money a dealer can charge for a doc fee, though some states do.
- Doc fees are taxable, and dealers consider them profit centers. As a result, it’s negotiable.
If you began the process of buying a car, you probably came across “doc fees,” or documentation fees. Dealers sometimes charge this fee in addition to a car’s purchase price, and it can often add several hundred dollars on top of what you and the dealer agreed on for the final sales figure. So, what exactly is a doc fee? Must you pay this? We have the answers.
What Is a Doc Fee?
A doc fee is typically charged to car buyers by car dealerships to process a vehicle’s paperwork. Essentially, a doc fee covers all the dealership’s back-office employees who handle the money to those who deal with the title, registration, license plates, and the DMV or revenue department. Some dealers incorporate the doc fee as part of the title, registration, and license cost.
The only problem: Shouldn’t the purchase price cover those costs? After all, if a dealership makes a profit on each car sold, shouldn’t some of that profit go to paying each employee? To many consumers, an extra charge like this seems fraudulent and unreasonable.
But is it fraudulent? In most cases, the answer is no. Many U.S. states don’t regulate the amount of money a dealer can charge for a doc fee, though some states do. If you’re in a state that doesn’t regulate the fees, prepare for the dealer to hit you with a bill of several hundred dollars, even after you’ve negotiated the purchase price to a mutually agreed point.
Why Do Dealers Charge Doc Fees?
Dealers charge doc fees to cover some or all the expense of creating and filing the mountain of paperwork required to sell or lease a vehicle. How often have you heard the term “shipping and handling” related to buying something advertised on TV? You pay what the product costs plus shipping and handling. Handling is a charge over and above the product’s sale amount to cover the costs of the paperwork and preparing the product to be shipped. Although they may limit the amount, states recognize a doc fee as a legitimate line item cost in vehicle transactions. To the dealer, it is a source of profit.
Do You Have to Pay It?
Doc fees are taxable, and dealers consider them profit centers.
So, do you have to pay the doc fee? The answer is yes and no. Some shoppers get so hung up on the doc fee that they forget about the most important part of a car-buying transaction: the bottom line. The bottom-line number includes the purchase price, tax, and every single fee you can imagine. That’s the number you focus on to negotiate.
Here’s what we mean: If you’re prepared to pay a certain amount of money with tax for a car, ask the dealer to deal in the bottom line or out-the-door price or a price that includes the doc fee if the dealer charges one. That way, you’re not haggling over the exact dollar amount of fees and taxes, which can be disheartening. Instead, you’re focused on the price you pay overall, and if the dealer wants to include a doc fee in that price, then so be it.
For instance, say you’re shopping with a $30,000 budget and looking at a $28,000 car with a $500 doc fee. Add in a 7% sales tax, and this car costs $30,495. In this case, you might tell the dealer you would be willing to pay $30,000 out the door. After that, it won’t matter whether the dealer charges the doc fee or not since you’re only dealing with the total price.
Can You Get Rid of a Doc Fee?
If you’ve chosen eliminating the doc fee as the hill you are willing to die on while negotiating the price of a vehicle purchase, be prepared to walk away from the deal. Because the doc fee is often a separate paperwork processing line item in a car deal and a profit generator, convincing a dealer to strike it from the contract might seem easy. However, car dealers are universally stubborn about removing doc fees. You stand a much better chance of lowering the total transaction price than striking the doc fee itself from a contract. Consequently, always ask for the out-the-door (total transaction price) and begin negotiating from there.
How Much Is a Doc Fee?
Dealers may charge between $50 and $1,500 for doc fees, which are taxable. Don’t forget that vehicle registration in one state may cost less than in another, and some states cap the doc fees dealers can charge. Furthermore, vehicle registration costs vary. For example, vehicle registration for a 2024 Hyundai Tucson gas vehicle in Orange County, California, costs $499. As a result, car buyers can expect to pay at least that much there. Consequently, before you head to a dealership, it’s best to check your state’s fees for those line items to determine the wiggle room on your invoice for doc fees since dealers often use these as profit centers.
PRO TIP: Autotrader editor Renee Valdes recently shopped for a 2024 vehicle, and during visits to several dealerships, she saw charges of up to $699 for doc fees. It’s wise to question all fees and ask for a breakdown.
RELATED: Car Financing: Are Taxes and Fees Included?
Be Aware of Other Fees
When negotiating the car price, we strongly suggest you check all the fees before you sign any papers. Be sure to explicitly ask the salesperson if the price includes all fees so they can come clean about any extra charges you might see on the final paperwork. This is especially important now as there may be extra charges to offset auto tariffs.
If a new fee crops up after this, be prepared to walk away and find a different car at a more honest dealership.
Editor’s Note: This article has been updated for accuracy since it was originally published.
this was a good read, and thanks for the heads up. so in utah im seeing doc fees and paperwork processing fess resulting in 1000k. where ive been told by some dealers doc fee is fees for the truck to be on the lot.
Thanks for reading, Craig. Doc fees can cover all sorts of things, and the fee for the same model can vary between dealerships. Remember that the only fee that is non-negotiable is a new car’s destination charge. Take a look at our article explaining destination and dealer fees to learn more.
this was a good read, and thanks for the heads up. so in utah im seeing doc fees and paperwork processing fess resulting in 1000k. where ive been told by some dealers doc fee is fees for the truck to be on the lot.
I tell the dealer, “don’t do any of the paperwork, then I don’t need to pay a doc fee.” Then they say, “we are required to fill out those documents by the state.” then I tell them “if the state mandates you fill out those document, then YOU are required to fill them out. Your job…not mine to pay for. Get the price to you agree to pay for the vehicle, locked in. Then tell them that’s what you get OTHER that tax, title and lien charges! They will either take it off or you simply walk away. I have NEVER and WILL NEVER pay a doc fee.
in Georgia the doc fee is $799.00. I know a dealer that sells 1000 cars a month because of owning several dealerships. That is $800,000.00 a month he mad on top of any other add owns.
Actually, there should be a firm law against “document fees”. They should be forced to put everything in price, PERIOD! No guess work. We all understand DMV and state fees are separate, otherwise state the price!
So you’re saying that there’s a guy or girl in your office somewhere that makes $500 every time you sell a car, just for documenting the transaction???
I’m In!!!
I just found my new job!!!!
I’ll even go to Office Max and get my own PC and Printer, plus supply the paper!!!!
I have no problem with the dealer charging doc fees. I have a big problem with them not clarifying that fee upfront. They wait until it is time to pay for the car you agreed to buy before telling you about it.
Fortunately, in Texas, the law doesn’t allow a fee above $150, unless the seller provides justification for the higher charge. So, since there is not justification required for $150 or less, guess how much doc fee is in Texas (for the most part)? You guessed it, $150. Not sure that even that amount can be justified if you consider that most transactions are electronic and probably consume no more than an hour to complete, meaning the dealership would be paying a ridiculous hourly wage for someone to process documentation, even factoring in the costs of the equipment used to do the work (which can be spread out over the hundreds of monthly transactions).
I’m a jaded smart-ass new yorker. I simply said “NO” and “NO”….and “NO”….and “NO”
I walked out of a dealer two years ago that wanted to charge $499 doc fee, plus an additional $299 vin etching fee. Tried to tell me fees were required by law. Drove 4 hours and paid $80 in total doc fees and no vin etching
The real reason the dealers charge doc fees:
99% of new car purchases are financed through an outside lender. The financing company will “advance” to the dealer a lump sum upon completion of the financing docs. The finance company will then in turn collect the loan payments and make a nice profit off the interest portion of the auto loan. Since the finance company pays the dealership before receiving any installment payments, the dealer NEVER is advanced the full selling price of the car. For instance: Sale Price of $12,000. Down Payment of $2,000. Amount financed $10,000. The dealer will likely be advanced $8000-$9000 from the finance company rather than the entire $10,000. However, the finance company will advance 100% of “front end fees” such as: doc fee, facilition fee, admin fee, tag and title fee, and all the other bogus fees the dealership includes in the final paperwork. This is why the fees are kept seperate from the purchase price or “list” price. The dealership makes up for the lost profit by adding additional fees, which the consumer then pays back, with interest!
Had a dealer today loss a sale on a nice Porsche over a $489.00 document fee that showed up on the final settlement paperwork. I had expressly ask if there were any further document fees or expenses that would be charged above the negotiated price and been told “no extra fees”. They then tried to make excuses why it couldn’t be taken off. Run from dealers like this.
I would have said “you need to throw in $489 worth of extras to make this deal work”
I find it hard to believe you were SO CLOSE to making a deal on said Porsche, that you lost it over a $489 MANDATORY charge. Must not have wanted the car that bad, or plain COULD’T AFFORD that specific car. O well, your loss, not the dealer’sw. They’ll sell it to someone who CAN AFFORD to pay DOC.
Can a dealer charge a doc fee AND an admin fee? They seem like one and the same.
No one wants to pay the doc fee. It sucks. But at reputable dealerships, there are many costs, and every single customer has to pay the doc fee, no exceptions. Look for a dealership that has a SmartPrice and every customer pays the same price, no haggling, such as Herb Chambers. Their price and fees are non-negotiable and honest.
yes and now. you CAN, as the article says, make sure you pay the handshake price + govt fees. You shake on 10k, that should be the bottom line. Maybe its line 1- $9000, and 1k in doc fees and rustproofing etc. .. but the bottom line should be the price you shook on.
Dont confuse this Doc fee with a Doc stamp fee, which is out of the dealers control as it is charged in some states by the state. example from florida:
I just went through this today having worked Finance in a dealership years ago its a made up fee.. however if they charge one customer they have to charge all. We never charged the doc fee all it is is profit it has nothing to do with plates and registration. It is “preparing the documents” which is nothing special the computer takes car of all that in less than 10 minutes. Some states regulate the max you can charge some dont..if you live in one that doesnt you need to negotiate period! If you live in one that does believe me they will charge the max..in my case 168 and no way was he backing down b/c he can get sued, But remember this dont let anyone tell you ITS A LAW IT IS NOT!!!!
Def not pure profit Debbie. I have never seen a computer make sure a deal is funded from a bank or send the info for plates or go through and break down a deal jacket and make sure mv goes to mv the bank contracts go to bank.
Great article on how to fight back against this sort of thing here: https://money.usnews.com/money/personal-finance/articles/2012/07/24/the-3-best-places-to-complain-about-a-company
The doc fee is a charge that, if a dealer has one, MUST charge every customer. It’ll be on every customers’ paperwork, or risk being sued for charging some customers but not all. If you think it’s used to pay to prepare deals and store records, or pay the back-office workers, or is simply “pure profit” going to the owner, it doesn’t make a difference. You’re going to pay it. Good negotiation is bottom line haggling. If one dealer gives you a lower sale price and more for your trade, but charges a higher doc and says you have to buy VIN etching and wheel locks, and the other dealer is a higher price without the junk, you’ll never know you’ll get a better deal at dealer #2 unless you work that Out-The-Door price. Also, don’t pull your hair out over a few hundred dollars when you’re already paying tens of thousands on a new car. Dealer profit on new car sales isn’t what you think it is…
“doc fee…MUST charge every customer…or risk being sued” – This blanket statement shows why you sell stuff for a living instead of use your brain for a living. Thanks for coming in today.”
> Also, don’t pull your hair out over a few hundred dollars
i PAID A DOC FEE OF 450.00 AND HAD TO PAY 200.00 FOR REG AND PLATES. I. think we were ripped
You were only ripped if you didn’t take that into consideration and negotiate down 450 ahead of time. The 200 is set by you state.
You were NOT ripped off. As a matter of fact, $450 for a doc fee? that’s unheard of! you made out great! Also, something to keep in mind…dealers are a profit making business so is selling homes, selling expensive shoes way over manufacturing price! Dealerships are not a non for profit organization and thats how come its referred to as a BUSINESS.
If you were u have a nice law suit. Dealers can’t make money on plates. The issue is that no matter what a dealer does everyone thinks there getting ripped off but when the new iPhone comes out we gladly hand over 1,000 dollars no questions asked.
Got charged doc fee of $2180 that I did not see till months latter, ever heard of one this expensive ?
No never. But in all honesty if you allowed this to happen you deserved to get screwed. Just the truth my friend.
What if you come preapproved? Do you still pay the doc fee?
Yes you do because they still have to build the contract and plate the car for you
The most important fact about these doc fees is the are not a fee of any kind. They are not required by the government, the bank, or the manufacturer. They are simply the selling price of the vehicle separated into two parts, price and doc fee.
Dealers do this for several reasons. First they think this will increase their profit as many people incorrectly assume the fee is real. Second, by separating the price, they can advertise a lower price and, as a result, get more people into the dealership
Dealers have many costs associated with selling a vehicle. By definition, all dealer cost, including costs to prepare documents, are part of the price.
A buyer should recognize any cost for the dealer to prepare the documents is minimal. Particularly in the age of computers. Why the should anyone pay a dealer hundreds of dollars for nothing.
Most dealers have taken this tactic further. They have learned if they have the doc fee printed on every sales contract more people will assume the fee is light. Another reason they print the fee on the contract is for legal reason. They must show everyone paid the fee or they risk being sued.
However, that does not mean you have to pay it. As this article suggests, simply reduce your offer by the doc fee. Dealers know this fee is bogus. If your price offer is realistic, based on research, the dealer will not let you walk away.
Except for the real government fees such as registration and sales tax, everything at the dealership is negotiable.
A few dealers we spoke to said it’s a dollar amount designed to cover the cost of them doing the DMV paperwork for you. Some dealerships might let you skip the fee and go to DMV yourself, but we only think that’s worth considering if the doc fee is more than $100. You might be able get the doc fee reduced, but focusing on that might mean you get a worse deal overall.
You’re about the only sensible one on here. I never pay it it’s a fake fee
Does the dealer not pay the employees for the jobs that they do? The bottom line is the doc fee is money the dealership puts in his or her pocket.
Right on
Most car salesmen work many 13 hour days and sometimes on their day off too. It adds up to 75 hours per week in reality. They do not get any of the doc fee, and if there was no doc fee then dealerships would just have to charge 200 – $500 more per car.
The profits on new cars a nowhere near what the average person thinks. The profits are tight and when you buy a car you have to remember there are other processes involved in your purchase. Some of these include processing your motor vehicle, sending and receiving money to and from the bank, going through the paperwork to make sure everything is correct and that your loan is funded properly. All of these things require a person to do it and that person has to be paid. In all there are about 15 people or 15 different jobs that are associated with one car purchase. The price of the car is the price of the car and then comes all the other things that must be done to process the purchase.