What Is a Documentation Fee for Buying a Car?

When buying a car, the documentation fee is a fee charged by the dealership to the consumer to offset costs associated with completing title and registration paperwork arising from the sale. Not all dealerships charge documentation fees.

Identification

The documentation fee must be listed on a purchase order or buyer's order, just as all other fees. Because the fee is taxed, it is often listed directly underneath the pre-tax cash selling price of the vehicle on the buyer's order.

Types

Some manufacturers may have limits on documentation fees for employees. For example, Ford does not limit the documentation fee charged to retail customers, but dealerships may not charge a documentation fee on employee purchases.

Function

The documentation fee for buying a car covers expenses related to processing paperwork, but it is separate from registration fees charged by the state.

Warning

No matter what a dealership says, the documentation fee is not charged by the manufacturer, nor is it necessary to register the vehicle. All state registration costs are listed as separate line items on the buyer's order.

Expert Insight

Edmunds.com car-buying specialist Philip Reed notes that you should avoid paying more than $100 for a documentation fee. If it is higher, negotiate a lower selling price for the vehicle to offset this higher amount.

References

• Edmunds: What Fees Should You Pay?