Everything You Ever Wanted to Know About a Dealer Doc Fee

New or used, the price on the window of that shiny car is seldom what you pay out the door. You should always plan on title and license fees, a destination price (if it's a new car), applicable sales tax and the documents fee, which is often referred to as the "doc fee." Some dealers add additional charges for things like VIN etching, preparation fees, you name it, which is why we recommend determining the final out-the-door price on the car you want and negotiating on that number alone.

Final Fees & Negotiating Tips

Doc fees can have a lot of names: conveyance fees, processing fees or service and handling fees. They can make a real difference in the final price, too, and where you buy your car can have a big impact. We've seen a dealership in greater New York charge a $75 doc fee while a New Jersey dealer wanted $349 — for similar examples of the same used SUV. That's because New York state has a $75 maximum for doc fees, according to the Greater New York Automobile Dealers Association. New Jersey, like 34 other states and the District of Columbia, has no such cap.

Which states cap doc fees? We combed through state laws and called dozens of dealer associations, DMVs and other governing groups. Here's what we found.

• Alabama has no cap on doc fees, according to the Alabama Department of Revenue.
• Alaska has no cap on doc fees, according to the Alaska Auto Dealers Association.
• Arizona has no cap on doc fees, according to the Arizona Automobile Dealers Association.
• Arkansas calls them "service and handling" fees and caps them at $129, according to the Arkansas Automobile Dealers Association. Dealers cannot charge a separate doc fee.
• California calls them "document processing" fees because of the association between doc fees and government charges, the state's DMV told us. California caps the fee at $65 if the dealer hasn't partnered with the state to provide on-site registration services to the buyer. If the dealer has such a partnership, it may charge up to $80.
• Colorado has no cap on doc fees, according to the Colorado Automobile Dealers Association.
• Connecticut has no cap on doc fees, according to the Connecticut Automotive Retailers Association.
• Delaware restricts what's called the "doc fee" to 3.75 percent of the vehicle's value, but it goes to the state in lieu of sales tax, according to the Delaware Automobile and Truck Dealers' Association. Dealers can charge processing or administrative fees (what other states would call a traditional doc fee) and there is no cap on that, the state's DMV told us.
• The District of Columbia has no cap on doc fees, according to the Washington Area New Car Dealers Association.
• Florida has no cap on doc fees, according to the Florida Automobile Dealers Association.
• Georgia has no cap on doc fees, according to the Georgia Automobile Dealers Association.
• Hawaii has no cap on doc fees, according to the Hawaii Auto Dealers Association.
• Idaho has no cap on doc fees, according to the Idaho Automobile Dealers Association.
• Illinois caps doc fees for 2014 at $166.27, according to the Chicago Automobile Trade Association, but that's subject to increase each year.
• Indiana has no cap on doc fees, according to the Automobile Dealers Association of Indiana.
• Iowa has no cap on doc fees, according to the Iowa Automobile Dealers Association.
• Kansas has no cap on doc fees, according to the Automobile Dealers Association of Greater Kansas City.
• Kentucky calls them "processing fees" but has no cap, according to the Kentucky Automobile Dealers Association.
• Louisiana caps doc fees at $100, but a bill that awaits Gov. Bobby Jindal's signature could raise the cap to $200 by year's end, according to the Louisiana Automobile Dealers Association.
• Maine has no cap on doc fees, according to the Maine Auto Dealers Association.
• Maryland caps doc fees at $200, but that will increase to $300 in July 2014, according to the Washington Area New Auto Dealers Association.
• Massachusetts has no cap on doc fees, according to the Massachusetts State Automobile Dealers Association.
• Michigan caps doc fees at $200 or 5 percent of the price of the car, whichever is less, according to Michigan's Department of State. The state adjusts the cap every two years, and the next adjustment comes in 2015.
• Minnesota caps doc fees at $75, according to the state's Office of the Revisor of Statutes.
• Mississippi has no statewide cap on doc fees, but the Mississippi Motor Vehicle Commission told us the state has seven districts with individual caps set at 25 percent above the district's average fee.
• Missouri caps the doc fee at $199.99, according to the Automobile Dealers Association of Greater Kansas City.
• Montana has no cap on doc fees, according to the Montana Automobile Dealers Association.
• Nebraska has no cap on doc fees, according to the state DMV.
• Nevada has no cap on doc fees, according to the Nevada Franchised Auto Dealers Association.
• New Hampshire defines "documentary fees" as those used to process vehicle titles and other paperwork with the state, and they're capped at $27, according to the New Hampshire Automobile Dealers Association. Dealers can charge administrative fees to cover their own processing costs, however, and those are not capped.
• New Jersey has no cap on doc fees, according to the Greater New York Automobile Dealers Association.
• New Mexico has no cap on doc fees, according to the New Mexico Automotive Dealers Association.
• New York caps doc fees at $75, according to the Greater New York Automobile Dealers Association.
• North Carolina has no cap on doc fees, according to the state's DMV.
• North Dakota has no cap on doc fees, according to the Automobile Dealers Association of North Dakota.
• Ohio caps doc fees at $250 or 10 percent of the price of the car, whichever is less, according to the Greater Cleveland Automobile Dealers' Association.
• Oklahoma has no cap on doc fees, according to the Oklahoma Tax Commission's Motor Vehicles Division.
• Oregon caps doc fees at $75 if the dealer processes the documents by paper or $100 if it processes them online, according to the Oregon Auto Dealers Association.
• Pennsylvania caps doc fees at $112 for manual processing and $133 for online processing, according to the Pennsylvania Automotive Association, a dealer group.
• Rhode Island caps doc fees at $200, according to the Rhode Island Automobile Dealers Association.
• South Carolina has no cap on doc fees, according to the South Carolina Department of Consumer Affairs.
• South Dakota has no cap on doc fees, according to the South Dakota Auto Dealers Association.
• Tennessee has no cap on doc fees, according to the Tennessee Automotive Association, a dealer group.
• Texas has no cap on doc fees, according to the Texas Automobile Dealers Association.
• Utah has no cap on doc fees, according to the New Car Dealers of Utah, a dealer group.
• Vermont has no cap on doc fees, according to the state's DMV.
• Virginia has no cap on doc fees, according to the Washington Area New Auto Dealers Association.
• Washington caps doc fees at $150, according to the Washington state attorney general's office.
• West Virginia caps doc fees at $175, according to the West Virginia Automobile & Truck Dealers Association.
• Wisconsin has no cap, according to the Wisconsin Automobile & Truck Dealers Association.
• Wyoming has no cap, according to the Wyoming Automobile Dealers Association.

We'll try to answers any remaining questions.

What's a doc fee, anyway?
Doc fees cover the cost a dealership incurs to process a vehicle purchase. In other words, they pay for all the paperwork (and personnel) involved with selling you that shiny new ride. Doc fees originated when dealerships separated their Finance and Insurance departments, commonly dubbed F&I, from the rest of the dealership around the 1960s, Seung Min "Mel" Yu told us. Yu is an independent automotive consultant who's owned Chrysler and Volkswagen dealerships in Wisconsin and Michigan. The dealership's departments — sales, service and so on — made money off various parts of the transaction. The F&I department, meanwhile, took on the processing side — but had little revenue to pay for itself. "That's basically where the documentation [fee] was created," Yu said.

Is it charged for used vehicles too?
Generally, but that's up to the individual dealer.

If there's a cap, can dealers elect to charge less?
Yes, but that's up to the individual state and dealer. "It depends on what that state law says," Sherralyn Peterson, an incentives consultant who works with GM and Ford dealers across 21 states, told us. "Some state laws say you have to charge everybody the same amount, so if it says that, then you really can't deviate."
 
What if I lease a new car? Do I have to pay doc fees on that, too?
Yes, Peterson said.

I live in a state with sales tax. Is a doc fee taxable?
It depends. California, Illinois and Arkansas specify their caps as taxable; Iowa says doc fees are not taxable. Each state has its own laws.

Do all shoppers at a given dealership have to pay the same doc fee?
Usually. "Most dealers now are real cautious about being consistent with all their customers," Peterson said. "I see most dealers charging the same amount." Still, some states have unique fees for certain buyers. Michigan and Ohio stipulate lower doc fees for anyone who buys an especially cheap car. Some automakers stipulate unique fees for certain buyers: "When I had a Chrysler store in Wisconsin, I was charging $135," Yu said, but for customers with a family-and-friends or employee discount, he was allowed to only charge $75.

Are doc fees negotiable?
Doc fees cover real costs, so it depends on the dealer. "If you have someone that's irate about [the doc fee] you have to figure out a way to somehow" adjust it, Peterson said. "And there are ways." Even if a dealer won't budge on the fee, remember that the out-the-door price typically is negotiable, so a reduction somewhere else could account for a steep doc fee.
 
What if I live in a different state from the dealership?
You pay the doc fees based on where the dealership is, not where you live, Peterson said. That differs from sales tax, which you pay based on your residence.

Why don't more states cap doc fees?
In a perfect world, all dealers would charge similar doc fees — and no one would be out of line. Unfortunately, some dealers charge excessive amounts. A 2012 investigation by Phoenix's KNXV television station found local dealerships charging as much as $499; Peterson said she's seen fees range from $100 to $500. That's why dealer associations encourage moderation. The Iowa Automobile Dealers Association cautions "every dealer that charges an unreasonably high doc fee is putting the dealership — and all Iowa dealers — at risk for an investigation." Bill Sepic, president of the Wisconsin Automobile & Truck Dealers Association, told us "the dealer has to have documentation of what makes [the doc fee] reasonable." And the Texas Automobile Dealers Association told us that although Texas has no cap, the state imposes a $125 "safe harbor" provision — essentially if dealers charge $125 or less, they're unlikely to be investigated.
 
Editor's note: State laws often change each year, so bear in mind this information is current as of June 2014. Call your local DMV or state's consumer protection agency for specific information.

Cars.com photo by Evan Sears

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