Reasons for the Fee

• Dealers and lenders use this fee to cover the manpower and costs of various paperwork processing. Some of the cost, known as the document fee, is passed to the borrower. Lenders and dealers process titling, registration, contracts, insurance and motor vehicle paperwork, which is how this fee is justified by those who charge it. Some establishments call this fee an administrative fee. Manpower is required to process paperwork, like the runner who submits paperwork to a motor vehicle department or the bookkeeper who keeps state-required motor vehicle or tax records.
  
  

Cost

• The cost of a document fee varies by lender and dealer. Some states cap the cost of the fee, so you might pay less than $100. You might also find some dealers charge in excess of $600 for the document fee, a high price for administrative processing. This fee is often viewed as dealer profit. Some dealers and lenders decide not to charge the document fee at all.
  
  

Negotiating

• The fee itself is often non-negotiable, as many states require that the dealer charge all customers the same fee regardless of amount paid or borrowed. You'll have to negotiate the cost of the fee in other areas of your loan or purchase. Ask your lender to discount the overall cost of your loan or your first monthly payment by the document fee amount. You can ask your dealer to decrease your vehicle's purchase price, or other purchased items, such as warranties or aftermarket accessories, by the document fee amount.
  
  

Shopping Elsewhere

• If you find that many dealers in your area charge more than $100 for the document fee, consider shopping outside your state. If you live close enough to a state that caps the fee amount, you can save hundreds of dollars. Most dealers are able to process nearby state motor vehicle paperwork for buyers, so you won't pay differently for motor vehicle fees or tax. Not all lenders charge a document fee, so shop accordingly.