Car Dealer Documentation Fees

What a documentation fee is

A documentation fee, or doc fee, is what a dealer charges for preparing and processing the paperwork on a sale. It is sometimes called a dealer service fee, a processing fee or an administrative fee. It is set by the dealer. The state does not collect it and does not receive it.

Does the state limit it?

Some states do and some do not. Here is what we have confirmed so far:

• Arkansas limits the dealer service and handling fee to $129. Dealers must charge it uniformly and state that it is not an official fee.
• New York limits the dealer's paperwork fee to $175, plus the actual title, registration and plate fees.
• Missouri allows an administrative fee up to a maximum that the Department of Revenue calculates and publishes each year.
• Pennsylvania limits the documentary preparation fee and adjusts the limit every year for inflation.
• Ohio limits the documentary fee to the lesser of a set amount and 10% of what the buyer pays under the contract.
• California caps the document processing charge in the Vehicle Code. The limit depends on the dealer and has been amended recently, so check the current figure.
• Texas: a documentary fee that is stated separately on the invoice is not taxed. We have not confirmed a fixed dollar limit.
• Virginia: the dealer processing fee is included in the price the state taxes.
• Other states we cover: we have not confirmed a specific limit, so check each line on your buyer's order.

Is the fee taxed?

It depends on the state. Texas does not tax a separately stated documentary fee. If your state does tax it, the tax is added on top. The calculator handles this for the states where we have confirmed the rule.

How to deal with a high fee

• Ask for the fee up front, in writing, as part of an itemized out-the-door quote.
• Compare the total out-the-door price between dealers instead of the fee alone. A dealer with a high fee may offer a lower price.
• Where a cap exists, check the fee against it. If the fee is above the cap, ask the dealer to explain.

What the fee is called

The same charge goes by different names, and the name can tell you which state rules apply. Arkansas calls it a dealer service and handling fee. Virginia calls it a dealer processing fee. Ohio uses documentary service charge, Pennsylvania uses documentary preparation fee, Missouri uses administrative fee, and New York refers to a fee for preparing the paperwork.

How the fee is treated for tax

• Texas: the Comptroller says separately stated charges for preparing and processing transfer documents are not taxable, so the calculator keeps the fee out of the taxable amount.
• Virginia: the DMV includes the dealer processing fee in the gross sales price used to work out the sales and use tax, so the calculator adds it to the taxable amount.
• Other states we cover: we have not confirmed whether the fee is taxed, so the calculator adds it to your total without adding tax to it. Check with your state's revenue department.

Documentation fee versus other dealer charges

Title, registration and plate fees are set by the state. The documentation fee is the dealer's own charge, and so are dealer prep, market adjustments and add-ons such as a service plan or window tint. When you compare quotes, separate the two groups: the government's fees should be nearly the same at every dealer in your state, and the dealer's charges are where quotes differ.

What a cap means in dollars

• In New York, where a dealer may charge up to $175 for the paperwork, a $400 line for paperwork is $225 over the limit.
• In Arkansas, where the dealer service and handling fee is limited to $129, a $299 line is $170 over the limit.

A fee over the limit is a reason to ask the dealer to explain or to correct it. Some caps are set in dollars and some as a share of the price, so read the limit for your state before you sign.

Questions to ask the dealer

1. What is the documentation fee, and is it the same for every customer?
2. Is it listed as a separate line on the buyer's order?
3. Is it included in the price the sales tax is calculated on?
4. Does the quote include anything else the dealer charges, besides tax, title and registration?

Related

See the full picture in what an out-the-door price is and the state calculators for each state's own fee notes.

Calculate it for your state

• Arkansas car sales tax calculator
• Missouri car sales tax calculator
• California car sales tax calculator
• Texas car sales tax calculator