Dealer Documentation Fees

[The Critic]

I am picking up a car from an AZ dealer this week and they have a $595 dealer doc fee. Here in CA it is capped at $85 so this was a bit of a surprise. Luckily the final number more than makes sense, so it's a non-issue for me.

A user on reddit put together a graphic on doc fees by state. Not sure where he got his info from, but if accurate, it is eye-opening. Looks like the SE and Mid-Atlantic regions are the worst offenders.

 

[GON]

I am picking up a car from an AZ dealer this week and they have a $595 dealer doc fee. Here in CA it is capped at $85 so this was a bit of a surprise. Luckily the final number more than makes sense, so it's a non-issue for me.

A user on reddit put together a graphic on doc fees by state. Not sure where he got his info from, but if accurate, it is eye-opening. Looks like the SE and Mid-Atlantic regions are the worst offenders.

Thanks for posting the chart. I am using Edge for a browser and blocked the ability to view the chart. I opened the chart in firefox, and was able to view. I saved the chart in a jpg and hopefully everyone can view.

 

[ctechbob]

I don't usually have a problem with it. I know they're there and as long as they disclose them on the website, I can do the math. Deal either works or it doesn't.

 

[The_Jeff]

What bugs me is when they still screw up the paperwork. It's the same (to me) as having my taxes and insurance in escrow for my mortgage and having them drop the ball on paying things on time.

 

[skyactiv]

I hate the entire dealer process. The salesman that has to go back and forth with his manager and after you settle on a price, you deal with the finance guy who tries to sell you an extended warranty, alloy wheel insurance, key fob insurance.. . After that is all said and done they wanna make sure you give them a good review and 5/5 starts. Why is it called the finance guy because not everyone finances?

 

[DCDG]

That's okay when and if I am ready for a vehicle purchase I walk-in with a price and payment I want. If they want to sell me a vehicle they'll crunch the numbers to get me my price and payment regardless of the dealer documentation fees. if the fees are $600 then lower the vehicle price by $600. No one holds the signer at gun point you're free to walk and the dealership is free to lose the sale.

 

[andrew_j]

You don’t have to pay it however challenge in final negotiations . You can indirectly get them to lower price or waive it.

 

[GON]

That's okay when and if I am ready for a vehicle purchase I walk-in with a price and payment I want. If they want to sell me a vehicle they'll crunch the numbers to get me my price and payment regardless of the dealer documentation fees. if the fees are $600 then lower the vehicle price by $600. No one holds the signer at gun point you're free to walk and the dealership is free to lose the sale.

Your theory and course of action is spot on.

The issue is the consolidation of dealerships. Mega private equity and publicly traded organizations have been consolidating the franchise dealerships.

It gets tougher to work your COA when retail car dealerships are becoming a oligopoly.

Here is just one example. The state of Washington is a large state by both square miles and moderate state by population. The state of Washington has three Acura dealerships for the entire state. Two of the dealerships are owned by one mega auto group, the third Acura dealership is owned by another mega auto group. These two mega auto group employ the same policies. Hard to move to another dealership when choice simply isn't there.

Of course, going to rural dealerships, especially in states with declining population like Illinois is a way to execute your COA. But it isn't as seamless with the consolidation of franchise dealerships.

 

[demarpaint]

Doc fee is a money grab. If you don't want to get upset over it deal in out the door prices. The bottom line is it doesn't matter how they arrive at the figure, the only number that matters is the cost to actually take title to the vehicle and drive it off the lot.

 

[DCDG]

Your theory and course of action is spot on.

The issue is the consolidation of dealerships. Mega private equity and publicly traded organizations have been consolidating the franchise dealerships.

It gets tougher to work your COA when retail car dealerships are becoming a oligopoly.

Here is just one example. The state of Washington is a large state by both square miles and moderate state by population..The state of Washington has thee Acura dealerships for the entire state. Two of the dealerships are owned by one mega auto group, the third Acura dealership is owned by another mega auto group. These two mega auto group employ the same policies. Hard to move to another dealership when choice simply isn't there.

Of course, going to rural dealerships, especially in states with declining population like Illinois is a way to execute your COA. But it isn't as seamless with the consolidation of franchise dealerships.

Many times when I was at dealerships I always would scan the customer base to see the ones that actually needed a vehicle vs the ones that wanted that vehicle. The ones that needed a vehicle often got their price and weren't suckered the ones that wanted that vehicle over paid and got options they really didn't need and though I'm not witness in the boiler room - finance office this is an example I heard one on.

Customer says to salesman wow this is nice I love these seats but no I really don't need leather. salesman says why customer well leather is cold in the winters and doesn't it often crack? salesman you can get heated seats customer well how about the cracking salesman we offer a full body and interior coating protects the exterior paint and interior dash and seats. customer says great I want that. salesman great so the leather with heated seats will add the cold weather package $$chaching$$. Salesman are you interested in buying or leasing. Customer says leasing. I just shook my head all for a lease to give it back. Don't let emotions get ahead of your needs and wants.

 

[Donald]

To me it's a cost of doing business. There are things the dealer needs to do as a business. From doing the paperwork to making sure there is toilet paper and paper towels in the bathroom.

At 72 not sure how many more new cars I will be buying. Maybe my wife will buy a few more. I would like to just walk out on the dealership over the documentation fee and see if they buckle.

 

[macarose]

I charge the actual cost for the tax, tag, and title along with $20 for my time.

I know I'm leaving money on the table. But let me know of a dealer anywhere who is able to regularly send vehicles 2,000 miles away to their new customers.

 

[iahawk]

When I worked in the business we knew that the 'doc fee' money went into a separate account for the owner. Think about that.
A doc fee is complete and total BS. It is a scam. It should be called 'additional dealer profit'. You do not have to pay it. If a dealer insists then have them reduce the price of the car by the doc fee, that way it washes.

Dealers make a profit on the cars they sell and service. That is what pays for the office staff needed to run a business. NOT the doc fee add on BS.

 

[I<3oil]

Florida is horrible for this

 

[fantastic]

Looks like my home state of MO is the worst offender in the Midwest at $585.

 

[John Galt]

This was a pleasant surprise when I purchased through Carvana. They do not charge Doc fees. The only adds beyond the price we agreed on was the state sales tax, and the exact fee for the title and registration cost. Saved about 500 vs what my daughter paid for Doc fees at the local VW dealer a year later.

 

[AZjeff]

You don’t have to pay it however challenge in final negotiations . You can indirectly get them to lower price or waive it.

You will not get a dealer in Az to eliminate the line item doc fee, you negociate the OTD price you want and don't worry about how you get there. That way they can tell less informed buyers that "everyone pays it" when it gets tacked on in finance.

 

[I<3oil]

I hate the entire dealer process. The salesman that has to go back and forth with his manager and after you settle on a price, you deal with the finance guy who tries to sell you an extended warranty, alloy wheel insurance, key fob insurance.. . After that is all said and done they wanna make sure you give them a good review and 5/5 starts. Why is it called the finance guy because not everyone finances?

This is the part that kills me. You hemmed and hawed over $500 for 6 hours as the dealer/sales guy, irritated the crap out of me, etc. and you want 5/5 stars for that bs? Bruh..................

 

[JTK]

I am picking up a car from an AZ dealer this week and they have a $595 dealer doc fee.

You're not replacing the Ram are ya?

I agree with everyone else in this thread in that it's your overall out the door number that matters. This fee could be called anything.

I dread the dealer process anymore. It was some years ago, but I had a situation where they "accidentally" added gap insurance on the final contract. It was removed when I caught it. I know the "doc fee" has been capped in the PR of NY for many years.

 

[Nukeman7]

Organizations that are business savvy already know how to set pricing structure to avoid irritating the customer. As such, they should just bake-in the additional profit to the final selling price in lieu of "nickel and dime-ing" each individual line item.

From a psychological perspective, a customer feels better paying $70 for an oil change than paying $55 (oil change) plus $10 (shop supplies) and $5 (environmental disposal fee). Another example is tacking on a 3% surcharge for paying by credit card. The smart business owner would offer a 3% discount when paying with cash. It's all in the marketing and perception, even if the bottom line yields the same profit results.