Some of you are probably old enough to remember dealer prep fees, which amounted to nothing more than washing your car. Most dealers have stopped this. Some states, i.e., NJ, were notorious for this until a law was passed banning it.
Dealers have found a new way to make additional profit, the documentation fee. This is an addendum or additional fee assessed by the car dealer that covers administrative costs, i.e., title, registration, and other clerical tasks. Years ago the doc fee was small, in the $30. - $60 range.
The Doc fee was small so most customers would not question it.
Fast forward to today, the doc fee is now a major source of income for the car dealership.
From Truecar's site:
"Some states set a maximum amount, but most states do not have a limit. Eight states (CA, IL, LA, MD, MN, NY, OH, WA) set a maximum for dealer documentation fees; seven states (AR, KS, MI, MO, NH, NM, TX) do not have doc fee caps but do have restrictions on what “doc fees” can be called, and where information about them can be displayed; the remaining 35 states do not regulate dealer documentation fees, aside from some general requirements requiring dealers to post the same fee for all customers."
Dealer Documentation Fee Chart:
http://blog.truecar.com/2011/07/26/which-additional-fees-should-i-pay-at-the-dealership-what-is-the-doc-fee/
Consumer Reports on Doc Fee:
Documentation fee
Sometimes called a “doc fee” or “conveyance fee,” this supposedly covers the dealer’s cost for processing the paperwork for the purchase, title, and registration. Some states strictly limit this fee, but most do not. Where it is regulated, it’s often moderate: $50 or less in California, Louisiana, Minnesota, New York, Oregon, Texas, and Washington. In a no-limit state such as Connecticut, where Consumer Reports’ staff buy most of our cars, the fee typically runs from $200 to $300, but we’ve seen it as high as $500. It’s generally preprinted on the sales contract.
We have found it next to impossible to get our local dealers to reduce or eliminate this fee. Instead, we make it one of the final parts of the price negotiation: Get the dealer to reduce the price of the car by a like amount, and let the fee stay on the purchase agreement. Same goes for any “advertising fee.” As a fallback negotiating tactic, ask that some accessory such as floor mats or upgraded alloy wheels be thrown in free of charge.
Good luck negotiating the doc fee. When shopping for a new car last year in WV I found that none of the dealers would lower it. The dealer that had the best price for the car I wanted charged me a $100. doc fee. If I registered (including state inspection) the car myself it would have cost $53. I did not finance the car.
Dealers have found a new way to make additional profit, the documentation fee. This is an addendum or additional fee assessed by the car dealer that covers administrative costs, i.e., title, registration, and other clerical tasks. Years ago the doc fee was small, in the $30. - $60 range.
The Doc fee was small so most customers would not question it.
Fast forward to today, the doc fee is now a major source of income for the car dealership.
From Truecar's site:
"Some states set a maximum amount, but most states do not have a limit. Eight states (CA, IL, LA, MD, MN, NY, OH, WA) set a maximum for dealer documentation fees; seven states (AR, KS, MI, MO, NH, NM, TX) do not have doc fee caps but do have restrictions on what “doc fees” can be called, and where information about them can be displayed; the remaining 35 states do not regulate dealer documentation fees, aside from some general requirements requiring dealers to post the same fee for all customers."
Dealer Documentation Fee Chart:
http://blog.truecar.com/2011/07/26/which-additional-fees-should-i-pay-at-the-dealership-what-is-the-doc-fee/
Consumer Reports on Doc Fee:
Documentation fee
Sometimes called a “doc fee” or “conveyance fee,” this supposedly covers the dealer’s cost for processing the paperwork for the purchase, title, and registration. Some states strictly limit this fee, but most do not. Where it is regulated, it’s often moderate: $50 or less in California, Louisiana, Minnesota, New York, Oregon, Texas, and Washington. In a no-limit state such as Connecticut, where Consumer Reports’ staff buy most of our cars, the fee typically runs from $200 to $300, but we’ve seen it as high as $500. It’s generally preprinted on the sales contract.
We have found it next to impossible to get our local dealers to reduce or eliminate this fee. Instead, we make it one of the final parts of the price negotiation: Get the dealer to reduce the price of the car by a like amount, and let the fee stay on the purchase agreement. Same goes for any “advertising fee.” As a fallback negotiating tactic, ask that some accessory such as floor mats or upgraded alloy wheels be thrown in free of charge.
Good luck negotiating the doc fee. When shopping for a new car last year in WV I found that none of the dealers would lower it. The dealer that had the best price for the car I wanted charged me a $100. doc fee. If I registered (including state inspection) the car myself it would have cost $53. I did not finance the car.
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