Justifying the Document Fee

• A document fee is justified as a charge for processing the dealer paperwork for a car purchase. Dealers are authorized to complete and process motor vehicle paperwork on your behalf; some can provide plates, temporary or permanent plates or registration. Dealers collect fees and send them off to the proper establishment, whether it is the bank or a motor vehicle office. Also, dealerships handle the financing contracts for lenders. Some dealers may call the document fee a convenience or processing fee.
  
  

Dealer Profit

• Office workers usually handle the processing of vehicle purchase paperwork. Beyond the time or manpower it might take to process various paperwork, the fee ensures the dealer makes money. Most profit from a car sale is used to pay a salesperson or finance manager commission; either can make as much as 30 percent commission off the vehicle's profit. However, document fees aren't considered when calculating commissionable profit. If a dealership sells 1,200 cars in a year and charges $400 for the doc fee, the dealer makes $480,000 annually to process paperwork.
  
  

Dealer Selection

• It is beneficial to shop dealer document fees when searching for your next vehicle. Despite a low sales price, the dealer can still make a reasonable profit from your sale because of the document fee. You might find that two same-make dealers in your area charge differently for the fee, so consider the overall purchase price when you purchase a car. If you live close to a state that caps its document fees, you can save hundreds of dollars. For example, New York caps its fee at $100 while surrounding states charge hundreds more.
  
  

Negotiating the Fee

• Some dealers may argue that a documentation fee is non-negotiable based on state rules that govern dealers. Even if this is true, you should work out vehicle pricing to decrease this charge. Unfortunately, a dealer sales manager is likely unable to decrease dealership profit this way, but may be able to take more money off of the car's sales price. You may want to shop elsewhere if the dealer refuses to reduce the vehicle's price to offset the document fee charge.