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What New Car Fees Should You Pay?
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What New Car Fees Should You Pay?
Car-buying fees are confusing and costly for buyers. Find out ahead of time which new car fees are legit.
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That used car was recently sold for a new car. There were documentation fees at both dealerships we went to. What bothers me the most is one dealership added a pre delivery and post inspection under "dealer ad-ons" with other items and that came to $1900. The individual item costs weren't listed. I talked to the sales manager today about that particular list and asked why those items were on the list - I'm a senior (just hitting that milestone) - and have never seen it. He explained it but it was fluff to me - like the can of tire inflator that's given to many these days instead of a spare donut.
I come from NY and never saw any of these ridiculous fees. I'm sure we were had. (Well, I was - I was sold an AWD used car - written on the invoice from a dealership, had it inspected at my mechanic and later learned it was a FWD... BBB, no one could do anything about it.) NC will likely never do away with these fees and dealerships are scrambling to make money. A doc fee is a way of getting it.
I don't expect to come out of this recession (call it what you want). As that happens strange things pop up. This is one of them.
Another thing to be cautious of is the dealer adding the Tax, Doc Fees and other Fees into the loan. It would always be best for the buyer to pay those fees in cash, in comparison to adding them to the total loan and thereby paying (with interest) over the entire loan term.
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First, the only valid fees on a new vehicle purchase are those imposed by the government. Those are not a dealer cost and it is the buyer who pays those valid fees.
A documentation fee is not a fee! It is a cost, a dealer cost associated with the preparation of documents. This is no different than any other dealer cost such as heat, power, office supplies, employee wages, etc. As a dealer cost, any cost associated with the preparation of documents is included in the selling price. Price by definition includes all dealer costs plus profit (or loss). That is basic cost accounting.
Really, with today's computers the actual cost to the dealer to prepare paperwork is immaterial, probably much less than $50. Certainly nothing like the hundreds of dollars many dealers try to charge customers for documentation.
The real purpose of a documentation fee is simply to deceive unsuspecting buyers. Dealer F&I managers, the real questionable people in any dealership, concocted this scheme many years ago. A documentation fee is actually the selling price separated into two parts, price and documentation fee. Dealers do this for many reasons, not the least of which is to have the ability to advertise a lower price which they hope will entice buyers to visit their dealership. Of course, they also hope this deception will increase their profit.
Any intelligent car buyer knows the true selling price of a vehicle is the negotiated price plus the documentation fee.
When I buy if I want a price of $20,000 and the dealer has a doc fee of $300, my offer is $19,700. I have yet to encounter a dealer who would not conceded the doc fee when questioned. My daughter recently bought a new Toyota. Dealer had a $200 doc fee. After negotiating the price, and on my recommendation, she questioned the doc fee. They dealer adjusted the value of trade to compensate for the doc fee plus $50.
Most dealers now have the doc fee printed on the sales contract. This does not mean a buyer has to pay the fake fee. This is just another ploy by the dealer as an attempt to add some false validity to the fee. Another reason they pre-print the fee is to avoid a potential law suit. Dealers know they risk being sued if they do not charge the fee to everyone. Pre-printing the fee on every sales contract provides them protection from such law suits. However, the pre-print does not mean a buyer has to pay the fee. Simply have the dealer lower the price to account for the fee or have the dealer increase the trade value to cover the fee, as happened with my daughter.
One thing to recognize is there is no law or other regulation which requires a buyer to pay the fee, even if printed. If a dealer F&I person states this they are lying. It might be fun, if the F&I person tells you everyone must pay the fee, to ask the F&I person to put that in writing. My bet is they will never put it in writing because that would allow them to be sued. Of course, if the F&I person suggests everyone must pay the fee really listen to what they say. Saying everyone pays the fee is much different than saying everyone is required to pay the fee. If they say everyone is required, do not hesitate to ask what requires everyone to pay the fee. Is it a law, regulation, or simply the dealer's policy.
A couple of years ago, we were buying a new Ford. I questioned the doc fee and got an immediate consideration. What was interesting was another guy in the next cubicle was also questioning the fee. The dealer also gave him immediate consideration.
The point is all buyers should question these fees. A buyer should never lay down and pay the fee. That simply encourages dealers to continue this charade.
Anyone interested in an honest dealers view of these documentation fees should GOOGLE Earl Stewart on Cars. Stewart is a Florida Toyota dealer who provides real honest insight into a dealer's true objective. His take is quite enlightening.
People want to squeeze every last cent out of a car deal. They know what the invoice is, they know what (if any) the incentives are and they want to buy the cars for that number or even less!
So they impose a doc fee in an attempt to make "something"/
The buyers have no idea of the costs of opening the doors and doing business.
Or are you referring to taxes?
A big fee paid for etching some VIN numbers on the glass, etc.
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THIS IS A GOOD LINK TO USE
https://www.carmax.com/car-financing/car-payment-calculator
The exception to this is on a lease there is an acquisition fee which comes from the leasing company.
Any other fee a dealer attempts to charge is fake. Usually these are called documentation fee. Regardless of what they are called they are fake.
Dealers sell at price. Price includes all dealer costs plus profit. All dealer cost includes the very minor amount required for documentation. When you buy a new vehicle all the documents are completed while you are visiting that smiling F&I person.
The only additional cost to the dealer for these documents are small amount to transfer the documents to the MVA and to store the documents. The documents are transferred to the MVA either in a batch or electronically. Ask yourself if this costs the dealer up to $800 as noted in the chart for Florida?
The answer, NO!
Dealers and their cohorts in the media who argue such fees are legit are wrong.
Dealers will say they are required to charge these fees to everyone. Their purpose is to fool the buyer into believing the fees are required by law. They are not. Maryland, for example, requires dealers to note in any communication the fees are not required by law. Of course Maryland dealers try to hide this fact in the wee print.
As others have noted, these fees are nothing more than a profit grab by dealers. Dealers hope buyers will negotiate the price and simply accept the fee.
Personally, I have yet to find a dealer who will not eliminate this fee in some fashion. For example, recently I purchased a new BMW. After price was settled, the sales person presented the numbers. Included was a $299 doc fee. I balked and the dealer removed the fee. In this case the dealer was not going to lose a $60,000 sale over a silly doc fee.
In another case, helping my daughter buy a new Honda, the dealer also had a $300 fee. Again we balked. The dealer rewrote the deal to increase the value of the trade by $300. During this buy, there was another buyer in the next room. He also argued this fee and I could see the dealer compensated as with our deal.
Note, most dealers today have this fee printed on the sales contract. Just another tactic to fool the buyer into believe the fee is legit. Again, it is fake. Just because it is printed on the contract does not mean a buyer must pay it.
Be smart, do not fall for this con.
The simplest way to combat these fees is to adjust you price offer to compensate. If your price offer is $30,000 and the dealer has a $800 fee (Florida), just offer $29,200.
In the end be a smart buyer. Understand you control the negotiations. Understand the last thing any dealer wants is a viable buyer (one with the will and means to buy) walking away. Understand a new vehicle is a commodity, available at many places. Understand there is nothing compelling you to buy at any dealer.
Auto sales people will dispute the above. But they know it is true.
For a real dealer's view on these fake fees, GOOGLE EarlStewartonCars.
Kahu 299.00
Key Care 295.00
Est Tags 300.00
Doc fee 300.00
I have purchased vehicles and never came cross fees such as "Kahu" and "key care" fees. Before I negotiate the price further, just want to see how much of this is actually legitimate?
For the rest, simply negotiate a lower selling price to negate them.
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2015 Subaru Outback 3.6R / 2014 MINI Countryman S ALL4
If there is a "Doc" fee then why not a list of other "profit fees" such as : electricity fee, water fee, building maintenance fee, building rental fee, computer lease fee, .....
I coul dgo on and on ad nauseam. The bottom line is that the cost of handling the paperwork of buying and selling cars as a dealership is a "normal" cost of doing business. Just like rental on a building or paying property tax on the building.
To even suggest that it is "rational" to have a charge to the customer for doing what a business must by state and federal law as well as tax laws do is insane.
No you are WRONG 100% ni how you as EDMUNDS are dealing with this. Instead you should be using your geography to give a TOTAL price OUT THE DOOR before taxes at any dealership. This makes MUCH more sense.
Also Edmunds, if one state allows unlimited fees but the average is 600 and the neighboring state limits the fees to 80 then there is a NET COST DIFFERENCE in those states the must be reflected in your statistics. IT also means that SOME buyers should be cautioned to shop in the nearby neighboring state when possible!!!! This would be an incredible help and in fact could change the industry from its archaic attempt at ROBBERY after negotiation.
Generally, the doc fees are buried in the fine print. If two dealers offer the same car for $29,995, it one has a $1000 doc fee and the other doesn't, how does the one without a doc fee be at a disadvantage?
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Doc fees are up to the dealer.
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