Documentation Fees

jipster

First of all, as I understand it, a fee is more vulnerable to a lawsuit than the negotiated price of a product

I find it difficult to believe anyone would sue over a $300 doc fee. The burden of proof
to show discrimination would be a big problem for the plaintiff. To say,"We just feel it's fair to charge everyone the same price.", would seem better to me. Saying you have to charge a doc. fee, when you really don't, isn't going to work with the customers who know the law.

My Buick dealership had the preprinted doc. fee when I bought 5 years ago. I simply deducted that amount (plus $100 which is fair) from my OTD price.

lrguy44

Class actionis the issue, not individual. Even if the fee is negotiated in your OTD price, it will be deducted from the price of the vehicle and the doc fee will be shown on the buyer's order. That is fair game but only effects the sales department gross profit. Doc fees are not considered sales department profit.

euphonium

Doc fees are not considered sales department profit.

Oh, so what charity gets them? :confuse:

lrguy44

The dealer. Each department (sales, parts and service) is a seperate profit center. The Doc fee proceeds go to the dealership, not sales.

imidazol97

>Ohio impose a limit of $ 250 on doc fees & other states have limits also, but nowhere in the law does it say they must charge the upper limit or any fee at all.

When buying my last car, the salesman tried to say they "had" to charge everyone the full amount. I had the copies of the actual ORC (Ohio Revised Code) in my folder and I have the language skills to interpret what they say and what they don't say. He finally relented about the time I was ready to fold up and move to the next dealership who also had exact cars in the color I wanted available.

fezo

Good man.

Over in Chronic Carbuyers we've got a guy getting hit with a $700 doc fee! On a KIA of all things! I don't suspect he'll pay that.

michaellno

Yep, that be me.

Just called another Kia dealer .. their fee is "only" $499. I'm waiting to hear back from them for a quote on the Forte and '09 Optima.

Kirstie_H

$700 is outrageous.

In Missouri, pretty much all of the "documentation" that a dealer needs to do is done in the F&I office during the closing. The buyer is responsible for taking everything to the DMV, paying taxes, registering, etc. So, the total dealership time is about 15 minutes for the doc prep. I paid $99 for my last doc fee, which seemed fine.

In any case, negotiating an OTD price saves ALL of that anguish. That way if they think they HAVE to show the same amount in the doc fee line for all customers, that's fine by me. They can put $19,999 doc fee for all I care, as long as the car price is $1 once we've agreed on $20,000.

lrguy44

Kirstie, The Doc fee is pure profit to the dealer. But for legal protection, charge one, charge all. If I buy one of our trades I can pay what we are in the car for, but I still have to pay the Doc Fee.

euphonium

Another reason for a high DOC fee would be to offset the artifically increased value of the trade in so it looks like the borrower has a higher % of down payment?

cappla

Everyone - if you are aware of dealers that don't charge these bogus dealer fees, doc fees, prep fees, etc. - and just give you direct straight forward pricing (sales price of the car + tax + tag\title fees only) please list them here. One that I am aware of is Earl Stewart Toyota in Palm Beach, Florida. Any others?

jipster

Kirstie, The Doc fee is pure profit to the dealer.

How's it pure profit? You do 15-30 minutes of paperwork on a doc. fee... that's got to cost something. :confuse:

Should be a higher doc. fee on a trade-in... more paperwork.

lrguy44

Actually, there is more to than that. We have had that discussion before. There is alot of title, loan processing and tax work that is done after you leave, However, that is all done by hourly people.

lrguy44

Another reason for a high DOC fee would be to offset the artifically increased value of the trade in so it looks like the borrower has a higher % of down payment?

Absolutely false. Doc fees have nothing to do with the deal or sales department profits or trade values.

jipster

Actually, there is more to than that. We have had that discussion before. There is alot of title, loan processing and tax work that is done after you leave, However, that is all done by hourly people.

uhhh, you're the one who said doc. fees were "pure profit". I either missed the sarcasm or you pay your hourly workers $0.00 an hour.

Another can of worms, but if you charge me (cash) the same doc. fee as someone who has a loan thru the dealership (more paperwork) ... that's discrimination against the wealthy. I'll sue! :P

imidazol97

>There is alot of title, loan processing and tax work that is done after you leave

All they had to do was cash the check from the bank and put the title application into an envelope to send to the title office.

I put that akin to the dormatory charges I just looked at for a major university where they add on $500 for costs to maintain common areas. Why don't they just raise the fees for the dorm rooms by that much instead of adding it on later. I suspect a lot of it goes to pay a $3000000 football coach.

lrguy44

Kieth, since you obviously know what it takes you could revolutionize the industry by eliminating many jobs in the finance and title areas, Payoffs, payoff problems, title work, title problems, loan stipulations, etc, are just some of the functions. Don't ever believe anyone in the biz that sees what is involved. Jip, in accounting the Doc Fees like dealer pack, do not pay the hourly workers, They go into a separate fund that is used for other purposes. The purposes may be different in different dealerships but examples would be a customer service fund or write downs on overaged cars. But I forgot, profit is a dirty word. And yes,it is profit that is put back into the business.

jipster

Thanks for the info, but profit isn't a "dirty word"(sarcasm noted) to me. The whole doc. fee thing seems more like a game of "hide the banana"... that madmanmoo once described. The more variables a dealership can put into the equation, the more confusing and difficult to compare prices for the consumer. I guess that's called good business... I just don't care for it much that's all.

lrguy44

I can understand your feelings. In our state we have one of the lowest ($199) and it is conspicuously displayed and when desking a deal it is disclosed along with state title fees and taxes. We do not believe in the old "your payment is $400 plus fee plus tax".

jwilliams2

Here's my take: With entire websites dedicated to exposing cost, dealers still need enough margin to cover expenses. It's naive to assume a dealer can pay his expenses from a couple of points gross, but buyers fully expect that. They also expect nice facilities, classy showrooms, nice amenities, huge inventories, and professional employees. All this cost money.

Salespeople hate the doc fees probably more than the buyers. It's one more obstacle they have to overcome to make a sale. And as mentioned, they don't get paid on it.

And yes, it is kind of "hiding the banana", but with their cost of goods made public, a merchant has to to what they have to do to maintain profitability. If every dealer eliminated "doc" fees, the price of cars would go up correspondingly.

So, pay a doc fee, or pay more for the car. Six of one, half dozen of the other. It all comes out in the wash. That's why it's always best to shop an out the door price.

lrguy44

Well said. I cannot think of another industry where product costs are so public. Imagine what would happen with furniture or jewelry if their costs were so open.

imidazol97

>since you obviously know what it takes you could revolutionize the industry by eliminating many jobs in the finance and title areas,

Thank you for the compliment. Obviously I know that the cost of the employees of the dealership should be part of the profit in the _negotiated_ deal, not in hidden, addon fees dropped after the customer feels they have negotiated the actual price.

It's called ethics. You'll notice that the dealer lobbying organizations are the ones asking state legislatures to allow maximum fee limits which the individual dealers then purport to be required, fixed price addon values rather than variable.

When Mr. Irguy goes to the donut shop to pick up donuts for the office, do they say at the register, "The price is $10.59 plus our $5 donut warmer fee which is mandated by our overweight car salemen reduction exercise law passed by the state legislature last year, so that'll be $15.59." :P

greatlakesjr

Thank you for the compliment. Obviously I know that the cost of the employees of the dealership should be part of the profit in the _negotiated_ deal, not in hidden, addon fees dropped after the customer feels they have negotiated the actual price.

THAT'S where the knife gets twisted into you in all this. The big "surprise" by the dealer when you think you've reached a bottom line. If mentioned up front, better, but still, just give me the price of the car OTD and let your accounting department take my check and distribute it where they want. From the customer's point of view, the dealer should be one business as a whole. I shouldn't be paying xxx amount to this "profit center" and xxx amount to another "profit center". That's your problem.

imidazol97

>"The price is $10.59 plus our $5 donut warmer fee which is mandated by our overweight car salemen reduction exercise law passed by the state legislature last year, so that'll be $15.59."

The customer responds, "But the cost of the donuts should cover everything except sales tax."

The cashier responds, "Oh, we have to pay the people who cook the donuts, work at the counter, and run the cash register. We also have people who clean the floors and the equipment to meet the sanitary codes. That all costs _money_."

"Therefore," the cashier responds with the owner smiling in the background, "we have to charge a fee to cover those costs. See that little sign above the donut case where it says, "Fees and costs extra." We told you in advance there could be additional costs. Didn't you understand that, sir? You know we have to make a profit."

jwilliams2

Well, it would probably come to that, if websites showed the actual cost of the donut and prices were driven down to a couple of cents over.....

jipster

In our state we have one of the lowest ($199) and it is conspicuously

That's a reasonable doc fee. I usually add $100...$150 into my OTD offer to account for the cost of processing my paperwork and dealership expenses.

jipster

So, pay a doc fee, or pay more for the car.

Certainly true with my last buying experience. Lower price for the car than the competition... very high doc. fee and advertising fee. This was on a Kia.

I would think dealerships would know they scare a lot of buyers away with outrageous doc fees though. Anything over $299 is really pushing it IMO.

imidazol97

> prices were driven down to a couple of cents over.....

Bull dookey. If dealers were making "nothing" on their sales, they would quit. If you are saying dealer owners don't make as many thousands of dollars per sale as they would like after they pay employees, then that begs the point. The responsibility for paying employees, including F&I, is their cost. Why are they trying to act like it's the buyer's responsibility for a separate payment. AND the payment isn't even proportional to the amount of "work" involved in the dealer processing the paperwork through F&I. :sick: :shades:

fushigi

Our friendly hosts have done some doc fee research for us. See how your state compares: http://www.edmunds.com/advice/buying/articles/117494/article.html

imidazol97

>and advertising fee.

Why does the customer bear responsibility for an extra charge for advertising? Does the customer get to choose the type and content of the advertising? No. It's the business' choice--it's a part of their business cost. They can consider that when they negotiate the open and honest price with the buyers.
\\

Another thought on advertising as an extra cost is that the best advertising is word-of-mouth from happy customers who weren't ripped off.

jwilliams2

prices were driven down to a couple of cents over.....

I was obviously talking about donuts......

extra charge for advertising?

You pay for advertising on everything you buy. If the dealer is adding his own charge and it is not part of the invoice, I would look elsewhere.

However, most car manufacturers do add a charge for regional advertising to the invoice as a seperate line item, as it varies by area. Everyone pays it, like it or not. Of course you don't see this on other products. Cars are the only item you see the invoice on. If you dealt from MSRP, you wouldn't see it either.

This has all been discussed over and over. Suggest reading some of the prior posts.

lrguy44

In addition, if you buy a hamburger at McDonalds you are paying for their advertising.

imidazol97

>at McDonalds you are paying for their advertising.

Exactly right. And they _don't_ put a fee on at the register for 10 cents for advertising the extra fish sandwich for 59 cents.

jwilliams2

Exactly right. And they _don't_ put a fee on at the register for 10 cents for advertising the extra fish sandwich for 59 cents.

Of course they don't. You are only seeing the retail price. On most cars, it is included in the retail price as well. The only time you see it on most car deals is when you look at the invoice.

Lets move on.

lrguy44

Keith, most employees in a dealership are paid on commission. Sales people, sales managers, service advisors, managers and techs, parts people all get all or most of their income from profits in their areas. Only admin people are salaried or hourly. There is nothing wrong with working an OTD price - including any and all fees. Sales Department people are not paid on pack or Doc Fees. However, if they are disclosed and included when working a OTD price or a payment (most buyers being payment buyers) there is nothing wrong with them. What the dealer does with his total profit is his business. It is when they are hidden until the end of the deal that I have a problem with them. In fact, I have a story I will tell later how a Doc Fee sent me to another dealer when i bought my wife a new 05 TL.

lrguy44

No, they put the advertising cost in the product. Actually, RAG (Regional Advertising) funds are part of the invoice and included in the MSRP. Doc fees are a dealer add. Either way, you are going to pay for both. Does it really matter how or what fee are allocated on a OTD price?

lrguy44

When the new body TL with Tech Package came out in 05 my wife had to have one. At the time there were no dealer incentives. They were selling for MSRP. We have 3 dealers in the area. My offer was invoice, you keep the holdback and let us do the deal. The dealer close to me said no. Dealer 2 will do the deal on 2 cars he had with a $199 Doc fee. My wife was not fond of the colors so I went to dealer #3. They would do the deal on a color my wife liked better. Now, they know I am n the business. I asked what the Doc Fee was. they said $599. I said, "$599 is ridiculous". They said, "But it includes the etch. But since you are in the business, we will take out the etch and charge $399". My wife did not like the white color but the $199 doc fee got the deal.

jipster

service advisors, managers and techs, parts people all get all or most of their income from profits in their areas

Can't say I care for a service advisor's level of pay based on how much my repairs cost. My Mazda service advisor tried to talk me out of getting "goodwill" about a year ago when I had a ignition coil go bad. Said you had a warranty and it's up. I suppose he would get a bigger commission if I paid $200, rather than warranty work. I talked to the service manager and he didn't have any problem calling Mazda and having the cost covered under goodwill.

graphicguy

Doc fees....one of my "pet peeves". I make one offer. It includes taxes, license, doc fees....everything. How the dealership divides my offer up is up to him/her. Depending on my mood, as much as anything else, when I make up my offer, I'll include anywhere from $50-$100 for a doc fee in that offer.

I understand that there's a cost involved to file my paperwork for me. $200? $300? $700? I don't buy that (literally).

If a dealership wants a huge doc fee, then there's something screwy in their business model if that's what it really costs. Further, subtract that fee and I'll file my own docs. Who says that the dealership is the only one who can do that to begin with? I can mail my title into the state the same way they can. I can go to the BMV to get a license the same way they do. I even offered to do that once several years ago. Dealership said they were the only ones who could do it. Says who?

We can call it what it is, though. At least some states put a cap on them. Those that don't, it's a profit center. 5 minutes of work and 50 cents in postage, that they charge hundreds of dollars for.

Don't get me wrong. I do understand that a dealership must make money to survive. And, I also understand that they probably can't survive if they're selling cars where their only profit is the holdback.

Just don't treat the customer like we're stupid. As Aaron Neville says...."Tell It Like It Is". If a dealership says "hey, we can't make enough money with your offer", I'll respect that. But, trying to convince me that $10 in labor for "window etching" really costs $250, or that it costs them $500 to process my paperwork, well that's just insults my better judgment. And, that also tells me they think I'm stupid.

Obviously, once you finish at the negotiation table, adding in a doc fee in the Finance Office is an easier "sell". But, if I balk at the extra fees on the back end of a deal, I'm labeled as a grinder. Not really very flattering, either.

I have every right to know what the exact amount of money is coming out of my pocket to buy a car. Disguising a profit dollar amount as something else, well....that's something that just feels a bit dishonest, at least to me.

euphonium

It has been more up front & pleasurable to buy a $300,000 home than a $30,000 car.

Both sales people are commissioned, experienced, & eager, however the RE salesman is more knowledgable, professional, & caring. They also have to pass a state exam & invest in Continuing Education time & effort.

The car salesman doesn't reveal "fees" at the outset, but the RE professional informs up front what you can expect to pay & for what.

lrguy44

Thanks for the negative generalization. :P By the way, in my state we are tested and licensed..

imidazol97

>Lets move on

Feel free to move as you wish.

We had someone post earlier about an agency adding on an advertising fee which I read to be another addon profit item like the document fee.

imidazol97

The wording in the ORC (Ohio Revised Code) makes it sound like the document fee is only applicable when there's a loan and papers thereon to be filled out by the agency. Strange how the stores twist that to justify a higher fee but it's not even the way of payment in my case. I just wrote a check on our local regional bank.

lrguy44

I did forget to ask - how long have you been selling eal estate?

graphicguy

imid....Yeah, I've noticed that. And, I did the same....just wrote a check from my local bank.

euphonium

From 1959 to 1962. In '62 I made a career decision to major in Property & Casualty Insurance, gave up my RE license & never regretted the choice.

The experience in RE sales enabled me to appreciate what the sales people go through. I've bought & sold RE over the years and always used a Realtor.

I wish my auto purchasing experiences were of a higher caliber. Right now, I prefer a private seller to a used car salesman.

euphonium

1. The Ambush
Beware of being shuffled among a never-ending team of auto pros--you shouldn't have to talk to the sales guy out on the lot, the sales manager, the finance manager, the floor manager and the used-car manager just to buy a car. Pick one to deal with and stick with him.

2. The Confiscation
Whatever you do, don't give up the keys to your current vehicle--even if the "used-car manager" asks for them to asses the car for its trade-in value, even if the "sales manager" asks for them as collateral while you take a test drive. If negotiations should go amiss, it's impossible to walk out on the deal if you have no way to start your car.

3. The Bum Rush
Salesmen love to hurry you into a deal today. They'll try all kinds of things: On-the-spot delivery, haggling over details, one-time offers. Don't let them pressure and bully you into an impulse buy. Show up knowing what kind of car you need and what you can afford to pay--and if they can't provide that, leave.

4. The Buried Bill
Read over final invoices carefully before signing anything, in order to make sure you're not charged for something you didn't request. Alarms, extra cleaning, "prepping," rust-proofing, fabric protection and paint sealant are all common add-ons that sometimes appear on the invoice unknown to the buyer. Hint: Consider doing the VIN (Vehicle Information Number) etching yourself. Dealers charge hundreds of dollars to do it, but a home-etching kit costs as little as $20.

5. The Bait and Switch
Dealers may advertise one model in the paper, loaded with extras for a reasonable price, but then have only a lesser model (with less overall value) on the lot when interested parties show up to buy the one they saw in the paper. Best way to avoid this trap: The minute you realize the con, walk away.

lrguy44

You certainly need to go to a better class of dealerships. by the way, the UCM cannot appraise a car without driving it. Also, the consumers on this forum are much smarter than you give them credit for.

houdini1

The Lexus dealer in my town was sued over doc fees, etc. The end result is that they are returning all doc fees on all cars sold in the last 5 or 6 years. Actually you get a dealer credit and have to spend the refund with them. That has got to be a healthy chunk of change.

Over that time period we bought 3 cars from them and we are getting back an average of $350. per car. It had something to do with acting as an attorney without being licensed. They agreed to the settlement without admitting any wrong doing.

rlbjr2

Are these legit fees or can they be removed? I'm in NJ.
Window etch $189
Credit Processing $19
Online registration fee $7.70
Tire tax $7.50
Electronic signing fee $7.50
MV fees(4 yrs.) $300-322
Doc fee $269