Documentation Fees

robr2

Why isn't anybody doing anything about this common fraud to consumers? To what extent is this fraudulent practice being abused?

Well since no law was broken, where's the fraud?

I don't agree with documentation fees but if people agree to pay it, they agree to pay it.

jwilliams2

First off, can't we agree to eliminate the sweeping generalizations and name calling? This serves no purpose, except perhaps boosting the posters ego. I can not think of any occupation that doesn't have its bad apples. And yes, some tactics are inexcusable.

I would think the reason automobile dealers resort to various add on's like "Doc Fees", "Mop and Glow", and other such stuff is because buyers think they should pay actual dealer net cost plus a hundred bucks or so for their new $25k set of wheels. An infintesimal gross margin. Any more, and consumers think they are getting ripped off. How did it start? Don't know for sure, but its kind of like the chicken/egg question.

Just like any business, they have to find a way to cover expenses to keep the doors open. If they price their merchandise realistically with no add on's, they are not able to compete with the merchants who do have the "after" or "up" charges.

So we will have to live with it. But at least we can be civil. I enjoy reading this forum, with both the buyers and sellers input. But I really do think some folks get carried away, and I wonder why the car pro's keep coming back.

jwilliams2

Don't I feel silly. The post I was referring to was apparently deleted. Oh well....

littlewonder

Are doc fees negotiable? My local Infinity dealer says they charge these fees ($250) to cover the cost of the title of the car. This is in addition the motor vehicle fees (unspecified at this point). Can't I just go to the motor vehicle agency myself for the title and plates?

snakeweasel

Are doc fees negotiable?

Short answer is yes.

Long answer if you want them less be prepared to fight for it.

Doc fees are almost pure profit.

cccompson

Sure you can title the car yourself but don't expect that will have any impact whatsoever on the doc fee. As snake said, these fees are nothing more than additional dealer profit.

My view is simply to treat them as part of the price of the vehicle and negotiate accordingly.

cotmc

I've got a question that might best be asked via a story.

Let's say John Q. Grinder goes to a dealership and negotiates for over two hours on the purchase price of a new $22K Camcordima. This is his second trip to the dealer, having test driven the car two days prior. The sales guy has probably spent over 3 hours with this customer, and he really wants to make this sale.

The negotiated price is $100 above dealer invoice, not including holdback and any possible bonus money. When it's time for Mr. Grinder to sign the Purchase Order, he notices a pre-printed $400 Doc Fee added to the negotiated purchase price. This fee, for whatever reasons, is much higher than he expected.

When Mr Grinder insists this fee is too high, and threatens to walk out if the $400 Doc Fee is not reduced to a more "reasonable" $200, what happens? My guess is the typical dealer will eventually accomodate him (although I'm not convinced some dealers would stop him from walking), but where does that money come from? In other words, if an agreement is reached, is the sales guy probably losing some commission, or is the dealership eating this loss? :confuse:

Edit: I intentionally asked this to present the Doc Fee negotiation as an "afterthought", after both sides had thought price negotiations had already concluded. With an adjacent state limiting its dealers to about $45 in Doc Fees, but several local dealers here in Arizona charging $388 or higher, I think this story might be a common scenario.

british_rover

In that particular case I am suure the comission is already a mini and so wouldn't really matter to the salesperson.

On the other hand if you are looking at a dealer and you notice their doc fee is very, very high(499-599-699-etc.) then keep in mind that the dealership is basicly stealing commissions from their salespeople.

Most people that are somewhat informed are just going to work the doc fee into their OTD offer and so by having a very high doc fee the dealer gets added profit without having to give the salesperson his/her cut.

cccompson

I think it depends on the store and, possibly, the circumstances.

Just before I started shopping for a Mustang in July, the limit on doc fees in Ohio (which are capped by law) was raised from $100 to $250. As we were concluding negotiations I sought to have the selling dealer install some "free" accessories at our agreed price to close the deal.

Now, I knew that the dealer's cost for the accessories was less than $250 and the suggested retail was more than $250. The salesman didn't have any idea of the numbers and relied on those I supplied when he agreed to my terms. We NEVER discussed doc fees at all.

The interesting thing, though, was what happened when I picked the car up. The store did not have the items in stock and had to order them. The salesman had verified my accessory numbers by then and he said, "Our cost on these things is less than $250, is there anything else you want? You've got about another $20.00." This conversation happened prior to my signing the papers where, for the first time, the $250 doc fee was presented.

So, clearly, in this situation the store was treating the doc fee as the gravy that it plainly is.

I should add - it is just about impossible to get doc fees waived or reduced in Ohio. My impression (and it is nothing more than that) is that there is an industry agreement (explicit or implicit) as ALL dealers here want the state maximum to be listed on sales agreements.

phinneas519

...I've always paid less than $100 for my doc fees. Usually in the 70-90 dollar range. I don't know if Wisconsin or North Dakota limit the costs of those or if it's just because I bought "nearly-new" cars. Either way, I just paid it since at that point it wasn't that big of a deal to me.

cccompson

It certainly didn't used to be any big deal here in Ohio either. Until 1999 doc fees were limited to $30.00. That year the cap was increased to $50.00. In 2003 it was doubled to $100. This year it went to $250.00.

So, in a mere seven years it increased by a factor of more than eight from $30.00 to $250.00.

I don't suppose there's any connection whatsoever between campaign contributions and the Republican legislature that repeatedly boosted it and the Republican governor who repeatedly approved the increases (who here has line-item veto power).

audia8q

Doc fees are taxable....so the higher the doc fee the more tax revenue that is generated for your state. Do the math based on the total number of cars sold via dealers in your state and you will see why almost every gov/legislature will gladly increase doc fees if there is a cap. Has nothing to do with the political party. Last time I check Democrats arent exactly the champions of lower taxes. How else could they give it all away to undeserving people?

cccompson

Six percent (Ohio's sales tax rate) of the extra $220.00 is a helluva lot less than the extra $220.00 each dealer pockets on each sale.

Republican or Democrat makes no difference - the only way crap likes this happens is because some industry wanted it.

The doc fee held steady for well over two decades at $30.00 through Democrats and Republicans. As you may have heard during the campaign just past, Ohio has had a bit of a problem with political corruption of late.

jamesd1057

Help, I made a mistake! I put a deposit on a 2005 Kia Spectra5. Awsome price of $8500. Very happy with the deal. Autotrader advertised, called car dealer (200 miles away), secured the car with a $500 deposit. WIll pick up in 3 days. When I got faxed the "Retail Order" there was a $599 mark up for "costs and profits , cleaning paper work ect." .

Florida buyer

I want the car.

How do I weasel out of the $599 when I pick it u?

exb0

How do I weasel out of the $599 when I pick it u?

Easy, just call the dealer and tell them that you never agreed on those bogus junk fees, and to either remove those fees or return your deposit. If they refuse, tell them that you will file a complaint with the local Consumer Affairs and call your credit company to reverse the charges. They can’t keep your deposit if you haven’t signed anything agreeing to that price.

mikefm58

He might be stuck as there usually is some fine print in Autotrader ads. If he paid via credit card, then yes, stil disupute the charge, even if it was credit card via Paypal.

audia8q

Six percent (Ohio's sales tax rate) of the extra $220.00 is a helluva lot less than the extra $220.00 each dealer pockets on each sale.

of course its less, so what is your point?....do the math based on the number of sales in Ohio and add it up. You will see that the increase will bring in a dump truck filled with money to the states coffers...since the dealer is doing all the work for the revenue and the state is doing nothing, why shouldn't the dealer make the majority of the increase?. Remember, the voters could get rid of it if they put enough pressure of the legislature. pretty simple...

cccompson

My point was that the increase in tax revenue is a mere pittance compared to the windfall the dealers have garnered.

However, your point is well taken - raising the fee certainly didn't work against the interests of the state.

buckeyelarry

Interesting history on documentation fee - agree it primarily benefits the dealer.

Anyone out there get the fee waived - or reduced to less than $100 on new car purchase?

I'm in finally stages of negoiations - to assure no surprises I requested a pro forma invoice for the purchase. I was not totally surprised to see the documentation fee. However it will be a point to be negoiated prior to purchase as in my written proposal to the dealer, not included. Dealer will need to adjust price or provide a service of value.

Curious as to others experience in this area.

ppborceb

I have NEVER paid a doc fee!
When they tried to add it to the contract, and I saw it I said reduce the cost of the car by the doc fee and then you can add it back in on the contract, otherwise it's a deal breaker, and I don't buy the car.
So far this has always worked... good luck.

bobst

"Curious as to others experience in this area."

A lot of us make Out-the-Door (OTD) offers which include all of the fees we feel like paying - taxes, transportation, tags, etc. If we don't feel like paying a Doc fee, we don't include it in our OTD offer.

When we purchased an Accord in 2005, we offered $20700 OTD. They accepted, so we wrote them a check for that amount and drove the new car home.

That's how we avoid worrying about a Doc fee.

abraindrainer

There are a number of states (CA, PA, IL, OH, MD, etc) that legally limit doc fees and if you live close enough to another state you can use this bit of information. Carmax is a good place to start but this list is not complete: Carmax Estimator .

joel0622

It is preprinted on our buyers orders in big black bold numbers it has has an arrow pointed at it with a note next to the arrow in black bold print that says.

Processing Fee represents dealers recovery of adminisstrative overhead expenses plus dealer profit

I.E you are paying the light and water bill and the we are putting the rest in the bank.

1 out of 100 question it. It hardly even comes up, when people ask what it is I tell them to read the description and they usually laugh and say well at least your honest about it.

But like many previous posters have said. to the smart car buyer it really does not matter because they are dealing in OTD numbers any way. People who don't negotiate OTD numbers are probably paying more, they just don't relize it.

mikefm58

It is preprinted on our buyers orders in big black bold numbers it has has an arrow pointed at it with a note next to the arrow in black bold print that says.

The problem is, at least here in central Florida, the fee is about $500 and it's not disclosed until we get in the business office. Now I've been aware of this for some time so when I negotiate, I'm upfront and say my price includes all dealer fees, then add tax tag & title.

Being fee'ed to death is a pet peeve with me. Why not just include the fee in the price of the car? In the end, it doesn't make a difference.

joel0622

Ya that is weak busting it out on you after you think you have reached an agreement. That would probably make me walk to

geo9

The average DOC charge in my neck of the woods Daytona
and West Palm Beach is $1500 !!!!!!!!!!!

Thank god NY limits DOC to $75 bucks !

mikefm58

$1500???? Wow, that beats them all. Is that on any dealer's website?

geo9

Nope..............Usually depending on the state the DOC
must be disclosed in the fine print in the newspaper ads.
Noted the $1500 DOC ( the DOC varied depending upon brand
but only by a few bucks!)in the fine print when I was at my
Daytona place last week reading the Daytona news........

DOC fees are about the same and disclosed in the Philly
papers also.............

Imagine buying a toyota there and getting wacked with
the SET fee also.

Not to mention the ad fees every auto maker charges !

Sure glad I get that GM Employee deal.........NO ad fee,
DOC also limited to $75 (used to be NO DOC fee) and a
HUGE discount on top of rebates etc...........

I guess for the average buyer the Out The Door or
"Bobst" method is the ONLY way to buy !!!!!!!!! :P

joel0622

$1500!!!!! Cripes, I don't think I could look some one dead in the eye and ask them to pay that.

drive62

Brought over from another thread:

This is an excerpt from a local (and somewhat nationally recognized) auto writer about the state of Illinois' soon to be almost tripling of the DOC fee.

Sorry ISell but the "paperwork" a dealer does doesn't justify this ridiculous fee. As he suggests in the article, I negotiate a lower sale price to compensate.

Then, as now, the DOC fee isn't mandated by law, the amount is. Dealers are free to charge the fee or not as long as everyone pays the same if it is charged and it doesn't exceed $58.48 now ($150 soon), says Jerry Cizek, president of the Chicago Automobile Trade Association, which represents more than 500 Chicagoland dealers and spearheaded the original DOC fee as well as the proposal for an increase.

Bob Loquercio, chairman of the association and an Elgin Toyota, Scion and Hyundai dealer, insists the higher fee is justified.

"The amount of paperwork and people needed to process it have increased. The cost has quadrupled since 1992, but the fee hasn't kept up," he said.

Can't object to a higher fee if it costs $150 to process the paperwork--Loquercio won't say--but wouldn't hiring a staff that can dot and cross faster be a better solution?

Loquercio argues that many dealers, himself included, weren't in business when the DOC fee was adopted and had no say in the amount.

"I became a dealer in 1996. We probably had 10 documents to fill out on each sale then. Now it's more like 40. We've more than doubled our staff because [political] bureaucracy has increased the amount of paperwork to process even the simplest of tasks."

For example, 9/11 adds to the load.

"Dealers have been asked to do more, even checking to make sure they aren't selling to terrorists," said Cizek.

Compliance with the Office of Foreign Assets Control mandates dealers don't do business with "prohibited persons," defined as terrorists or those who support them. A dealer can't sell a car to or even change the oil for a prohibited person.

An office worker has to check the buyer's name against the people and organizations listed on the OFAC Web site with whom dealers can't do business.

There are 262 pages of names, but it only took a couple of minutes to see that there's no Jones, Thompson, Williams and only one Smith (Columbia) on the list.

What really gripes Illinois dealers? In at least 30 states dealers charge $400 to $900 in DOC fees--though anyone charging $900 must be using $100 bills for notepads. So what's wrong, they argue, with those in Illinois charging $150?

Of course, that raises what surely will be the next question dealers ask:

If other states charge from $400 to $900, why is Illinois charging only $150?
Replies to this message:

drive62

Transferred over from another thread:

This is an excerpt from a local (and somewhat nationally recognized) auto writer about the state of Illinois' soon to be almost tripling of the DOC fee.

Sorry ISell but the "paperwork" a dealer does doesn't justify this ridiculous fee. As he suggests in the article, I negotiate a lower sale price to compensate.

Then, as now, the DOC fee isn't mandated by law, the amount is. Dealers are free to charge the fee or not as long as everyone pays the same if it is charged and it doesn't exceed $58.48 now ($150 soon), says Jerry Cizek, president of the Chicago Automobile Trade Association, which represents more than 500 Chicagoland dealers and spearheaded the original DOC fee as well as the proposal for an increase.

Bob Loquercio, chairman of the association and an Elgin Toyota, Scion and Hyundai dealer, insists the higher fee is justified.

"The amount of paperwork and people needed to process it have increased. The cost has quadrupled since 1992, but the fee hasn't kept up," he said.

Can't object to a higher fee if it costs $150 to process the paperwork--Loquercio won't say--but wouldn't hiring a staff that can dot and cross faster be a better solution?

Loquercio argues that many dealers, himself included, weren't in business when the DOC fee was adopted and had no say in the amount.

"I became a dealer in 1996. We probably had 10 documents to fill out on each sale then. Now it's more like 40. We've more than doubled our staff because [political] bureaucracy has increased the amount of paperwork to process even the simplest of tasks."

For example, 9/11 adds to the load.

"Dealers have been asked to do more, even checking to make sure they aren't selling to terrorists," said Cizek.

Compliance with the Office of Foreign Assets Control mandates dealers don't do business with "prohibited persons," defined as terrorists or those who support them. A dealer can't sell a car to or even change the oil for a prohibited person.

An office worker has to check the buyer's name against the people and organizations listed on the OFAC Web site with whom dealers can't do business.

There are 262 pages of names, but it only took a couple of minutes to see that there's no Jones, Thompson, Williams and only one Smith (Columbia) on the list.

What really gripes Illinois dealers? In at least 30 states dealers charge $400 to $900 in DOC fees--though anyone charging $900 must be using $100 bills for notepads. So what's wrong, they argue, with those in Illinois charging $150?

Of course, that raises what surely will be the next question dealers ask:

If other states charge from $400 to $900, why is Illinois charging only $150?
Replies to this message:
isellhondas

drive62

I hope you don't think 35.00 is "ridiculous" ?

drive62

Replying to isell:

Did you not read the post? The DOC fee here will almost triple to >$150. And as the article states since other states charge much more it's only a matter of time until our fees will match theirs.

If your area "only" charges $35 the consumer should consider themseleves lucky. But it's pretty clear that your market is an anomaly. I'm sure it's only a matter of time until your area increases their DOC fee. It's clear the DOC fee is completely unecessary and only serves to increase the profits for the auto dealer.

lcomplex

Hi all, it's almost been a year that I have got my Fit Sport AT

now that I have got a notice from DMV and it states that the license renew registration fee is $160 - which is more than what I paid for my 1st year...sounds kinda weird to me because the reg. fee should be lower each year as the car gets older... can someone please post their registration fee for the Honda fee (especially license renewing owners)?

By the way, I am in Los Angeles, California

Thanks!

gasman1

I agree that the fee "should" decrease each year. You can always call your DMV and ask why the increase. However, there may a couple of reasons why it's slightly higher ($10).

1. You stated that it's been almost a year. Did you initially get a full 12 month registration or was it 11 months? (Some states provide partial year registration the first year to coincide with your "normal" annual registraation. My state uses birth month for annual renewal.)

2. The Fit was a new model (for the U.S.) last year. It's not uncommon for new models to have a 2nd year registration adjustment. The state (and many insurance companies)estimate their new model fees and adjust (fine tune) them for subsequent years.

3. It could be they increased their fees for all vehicles.

99si2fun

In my most recent car purchase, I had a set minimum purchase price from my bank to get the ultra low intrest rate. During negotiation the price dipped $209 below the minimum price. This left me scrambling to think of dealer addons that would get me back over the minimum. Well then came the $250 doc fee, as the fee is added directly to the cost of the car (check the title) problem solved. Never thought I would be glad about the increased doc fee, it saved me well over $250 over the length of the loan.

This vehicle was slightly used (approx. 700mi) and as such had $3000+ knocked off the the original MSRP, so going with a similar model near that price wasn't much of an option. I would've had to switch to a different brand to find what I was looking for at the price.

isabelalaval

This is from the Lexus website:

" "Delivery, processing and handling fee" is based on the value of the processing, handling, and delivery services Lexus provides, as well as Lexus' overall pricing structure. Lexus may make a profit on the delivery, processing and handling fee."

The fee for the RX 350 is $715 here in VA. Obviously, part of that is profit for the dealership. I wonder what the DPH fee is in CA, where there's a cap on doc fees?

210delray

I assume Lexus and Toyota have the same policies. If so, the "DPH" fee is listed right on the window sticker, and this is called "delivery" or "destination charge" by most other manufacturers. This is not negotiable, nor is it limited by state law.

The "doc" or "processing" fee is added by the dealer; it's oftentimes pre-printed on the buyer's order (contract) to make it appear to be non-negotiable. This is really a back-door way of adding profit for the dealer instead of simply raising the sale price of the car slightly. So in this manner, it's no different than dealer-added "accessories" like pinstripes or "mop 'n glo" (glorified wax job). Unfortunately for the salesperson, the processing fee adds nothing to his or her commission.

isabelalaval

See, that's where it's confusing. I understand that the "Destination Charge" is non-negotiable. But the wording is a little misleading... What about the "processing and handling" part?

Fishy, fishy...

bobst

No, Khristina, there is nothing fishy. They just want all of your money they can get.

Most of us just compute an out-the-door (OTD) price we are willing to pay and offer it to the dealer. That price includes everything.

If they accept, we buy the car. If they do not accept, we leave.

We may later go to a different dealer and offer the same price or a higher price, or we may go back to the same dealer and offer a higher price.

oldfarmer50

"...or we may go back to the same dealer and offer a higher price..."

Bobst, every time I have returned to a dealer I can almost hear the salesman say "gotcha" and dig his feet in as he prepares to bump the price. I guess they figure that once you come back you are now in a weak position. What would "The Patented Bobst Method" do if the salesman starts the bump and grind? Isn't your threat to walk taken less seriously at that point?

bobst

Wow, farmer boy, too much to think about.

When I was a young fella like you, I used to think too much. The golf pro Bob Toski accused me of "paralysis through analysis", and I was certaily very guilty of that.

I don't try to figure out what the sales person is thinking. I don't care if they say "gotcha", dig in their heels, or start to bump and grind.

I don't care if they take me seriously, but I am sure they take my money seriously.

Thinking back, I can only recall one time where I went back to the same dealer and increased my offer. They accepted and I bought the car.

joel0622

I don't try to figure out what the sales person is thinking. I don't care if they say "gotcha", dig in their heels, or start to bump and grind.

Thats great Bobst. I truly believe that allot of times people make the transaction much harder then it needs to be. There has been more then one occasion when a fellow manager has asked me why I did not make a particular deal and I tell them that the consumer was on information overload and was to informed to make a decision.

It is true there are folks who are armed with so much information that they can't make a decision. I have had cases where people come with there spread sheets, print outs, lap tops, consumer digest articles, EDMUNDS PRINT OUTS , and a slew of other info and if one thing deviates from the path they are on then they are just blown away, and are unable to make a purchase decision over the fear of getting taken for $1000 over a $300 option :confuse:

210delray

I don't care if they take me seriously, but I am sure they take my money seriously.

LOL, good one Bobst!

oldfarmer50

"...Wow, farmer boy, too much to think about.."

Well you know us young fellas, we like to think a lot. Seriously, would you continue walk out if the second offer was refused? How many chances would you give before you said "forget this guy"?

bobst

"would you continue walk out if the second offer was refused?"

To be honest, farmer boy, your question makes absolutely no sense to me.

From my vast experience, the only way to know our offer has been refused is to walk out, get in our car, and drive away. Until that happens, I don't consider the offer to be refused.

On our last two car purchases, the salesman followed us into the parking lot to tell us our offer had been accepted. We even had the doors of our car open and were getting in.

That is why we only make one offer on each visit to the dealer.

It's not over until the fat lady sings or until the farmer coughs up a wad of tobacco.

oldfarmer50

"...Makes absolutely no sense..."

Sorry to confuse you. I'll spell it out for you.

You go to the dealer make an OTD offer, he refuses. You get in your car and drive away. A period of time passes with no contact. You return and offer a higher amount. The dealer refuses, you get in your car and drive away. A period of time passes with no contact. Do you give it a third try with a higher offer or is it time to call it quits with this dealer?

P.S. I know that this would never actually happen to you but some of us may not have the masters' gift to get our research perfect. BTW, I'm sorry I ruined your new shoe with that tobacco I coughed up.

210delray

The way I understand it, since Bobst lives in a metro area with lots of competing dealers, he just moves on to the next dealer. I don't believe he'll ever show up a third time at the same dealership.

bobst

Oh, so that was your question. Now I understand.

I would definitely go back to the same dealer and make a higher OTD offer, as long as they still have the car I want.

Thanks for making your question so clear and precise. Very few people can do that, and that is what leads to a lot of misunderstanding. People mean to ask one thing, but they are not able to express it clearly, and the other person hears something entirely different.

And you can be sure I will work to improve my footwork to avoid any of your future tobacco missles.

mintjulep

Does anyone have experience with buying new cars in the Atlanta metro area and the doc fees levied there? The state of Georgia does not limit doc fees, and so far the two Honda dealerships I have contacted charge $498 and $599.75. What have others seen, and is fee this negotiable? :confuse:

As suggested by other posters, I will ultimately try to negotiate the OTD.