How to Avoid Dealer Doc and Other Hidden Fees When Car Buying

Car dealers have struggled with lower profit margins as supply has risen and market wide price transparency improved. One way they have fought to increase profits on each new and used vehicle sold is by adding a documentation fee. A salesperson or manager will often refer to this charge as a “doc fee”, “processing fee”, or “admin fee.” This is sold as helping to cover the cost of preparing paperwork, registering and licensing vehicles, processing loan and compliance documents.  

Long story short- a doc fee is a way for dealers to increase net profit margins as they don’t have to pay commissions on doc fees like they do the sale of a vehicle. The list included below details the range of fees charged and caps on doc fee charges for all 50 states. Please note that a doc fee is not a government fee but rather additional dealer profit. An estimated cost of actual doc work is roughly $25 to $75, but the doc fees you’ll find below will range from $85 (capped fee in CA) to over $1,000 (FL).

Do you have to pay these fees?

It depends, if you can negotiate the fee down or if the dealer says they can’t lower the fee, then negotiate the total out the door (OTD) price down further. States allow dealers to charge doc fees and many states require dealers charge all customers the same fee so as not to discriminate. In this case, they likely can’t wave it for you but can lower the out the door (OTD) price to offset it.

How dealers use doc fees to overcharge

Dealers often advertise a sale price - only $32,995!. Then when it comes time to review the total price they may have added a Doc fee: $85–$999, dealer prep or reconditioning, any number of protection packages, VIN etching on your catalytic converter, and/or an electronic filing fee. All are designed to raise profits. One of my favorites is a Michigan Special- a deer whistle. $99 to $299 for a high pitch whistle to help prevent deer from jumping in front of your car. If you ask to hear it, they tell you only the deer can hear it, but don’t worry it’s a steal. It’s a steal alright…

How do you avoid hidden and deceptive fees?

First, demand to see the total out the door price including all actual fees and taxes. Negotiate the total out the door (OTD) price only with visibility into all fees. Don’t let them trap you into negotiating a single number, most likely the monthly payment in isolation. To get to your desired payment they will extend the term of the loan, pay you less for your trade, and any other number of things, all of which cost you more.

The key takeaway when Car Buying

Your only chance at avoiding being overcharged is to negotiate remotely. Demand to see a detailed recap of the total out the door (OTD) price so you can push back on unnecessary fees and charges. The most critical tool you need is a detailed Gameplan that breaks down the step-by-step process that will help you get the vehicle you want at a fair price- on the vehicle, financing, only the aftermarket products you want, and the most for your trade. Our Car Buyer’s Gameplan shows you exactly how to buy like a Pro!

Hidden Dealer Fees You Should Always Reject

These fees add pure profit and provide little to no real value.

Dealer Documentation Fees – By State