Understanding Auto Dealership Documentary Fees

Dealership Fees


Understanding Car Dealership Documentary Fees
Credit: Photo Copyright: fizkes/Shutterstock
A recent CarProUSA radio show caller who owned two homes was trying to figure out the best place of the two to register a new vehicle. He did a lot of homework and found that there was a lot of difference in the insurance cost between his regular home and his second home in Florida, with the full coverage insurance in Florida being much cheaper. I pointed out to him that whatever he saved on insurance could easily be eaten up with dealership documentary fees in Florida, where dealers routinely charge up to $1000.

So what is the auto dealership documentary fee?

That is the charge dealers are allowed to pass on to the buyer to cover the cost of doing the paperwork, filing registration papers, making sure liens are properly recorded, making sure you get your license plates, etc. In most states, one small mistake can cause all the paperwork to be kicked back, so everything has to be checked and double checked.
In some states, like my home state of Texas, consumers cannot do their own registration on a new vehicle. The documentary fee (doc fee as it is called in the business) has to be done by the dealership, which means they have to employ one to five people, depending on their volume, to go stand in line at the County Tax Assessorís office to complete all the documents. The times I have personally done this, and it was quite some time ago, the tax people would only let you do five registrations and then you had to go to the back of the line. Iíve seen dealership employees (often called runners) spend entire days at the tax office.

Do most people even know they are paying this documentary fee?

Probably not because dealers tend to lump the doc fee in with tax, title, and license. In the negotiation process, when dealer prices you a car, it will be something like: ďthis vehicle will cost you $30,000 after rebates, TT&L for a total of $32,212.Ē Included in that $2,212 amount is the documentary fee. Sadly, most people when looking over their paperwork make sure the sale price is correct, but do not look at the breakdown of tax, title, and license fees. In all cases I know of, every amount of tax, title, and license is set by the state or county except the documentary fee.

Is a dealer documentary fee a legitimate charge?

If the fee is reasonable, yes. Trust me, you would not want to do what the dealers have to do in order to register your car. A fair documentary fee in my mind is a maximum of $150, but understand the doc fee is at the dealerís discretion up to a certain amount if your state sets a maximum doc fee amount. This may come as a shock, but 40 states have no limit on the documentary fee charge.

For our listeners, here are the states that have no limit: Alabama, Arizona, Florida, Georgia, Indiana, Massachusetts, Mississippi, Missouri, North Carolina, Pennsylvania, and Wisconsin. As I was trying to alert the caller to, Florida has the highest average in the country at $675. That means many people paid well over $1000 just to have their paperwork processed, and I would bet my bottom dollar, none of those people knew it.

California actually has one of the lowest doc fee limits at $80, New York, Minnesota, and Oregon cap the fee at $75, Texas is $150, Illinois is $166, Michigan is $190, Louisiana is $200, and Ohio is capped at $250.

If you are in a state that has no limits on the doc fee, I would ask what their doc fee is before going to the dealership. It will not benefit you to shop for the best price on a car, then pay $500 too much for a doc fee; you didnít get the best possible deal. Many dealers will gamble on the price of a new vehicle, counting on getting a very hefty documentary fee charge.

Ask Before You Sign Paperwork

If you get all the way to the finance officer and donít know how much the doc fee is, the time to ask is before you sign the paperwork, so the doc fee can still be negotiated.

One last point, to avoid an accusation of discrimination, many dealers have a policy of charging every buyer the same doc fee. In those cases, if you negotiate a lower doc fee, the dealer may reduce the price of the vehicle instead, and thatís fine. The bottom line is the bottom line.
Todgr81
So If I did the paper work myself for what the car dealers call a "doc fee" it will cost me anywhere from $200-$500?
Amy P.
Much depends on where you are located. Doc fees vary from state to state. In some states, they won't allow you to do new vehicle registration.

Jerry Reynolds, President
Despreporno Radio Network
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