This week I received an email from a listener about Doc fees/Documentary fees. It’s been a long time since I had a discussion about them and found his insight and humor refreshing.
Essentially Doc fees/Administrative fees etc… are a way for dealers to advertise prices that make no sense and still make a profit and drive everyone especially their competitors crazy..
Dealer “A” advertised “One Dollar” over invoice (if that was his actual cost??) and had a $600 Doc Fee then he would really be charging 601$ over invoice.
Dealer “B” Advertised $199 below invoice yet had a $800 Doc fee then both dealers would be giving the same deal, $601 over invoice.
Dealer “C” Advertised $601 over invoice, had no doc fee, would be offering the same deal as the other two.
Yes, they all three have notaries and girls back in the office doing paper work and have to work with the States DMV’s. That’s the fixed expense that comes with any large sales transaction. If a banks, credit card providers etc… can charge crazy fees, why can’t a car dealer?
As is mentioned in Daniel’s article below many states regulate them in a government effort to create tax paid sanity, (and they say Christian Car Guy is an Oxymoron.) While the State tax/State and Federal Excise taxes/ State and Federal doc fees sometimes amount to thousands of dollars…
Bottom line is always work from DRIVE-OUT Prices… The Bottom Line is the Bottom Line so to speak.
Here was Daniel’s Article printed in a Georgia News Paper.
“Doc fee” is not about health care!
Dan King Sr
The “doc fee” in an auto sales transaction is not a provision for medical care in case of personal injury! But a doc fee can produce some pain. The pain strikes your hip in the wallet spot.
A reputable and highly trusted “doc” at an auto hospital rolled out a computer-generated diagnosis for the ailments of our 10-year-old minivan. The warning lights in the dash, along with a jumping speedometer needle and stuck power windows, were already hard to ignore. The treatment the doc recommended could cost more than twice the value of the vehicle! Maybe I should just buy a new car.
I enjoyed the friendly conversations with sales professionals at dealerships. I listened carefully as sales managers listed prices and fees. I heard the vehicle price, a discount, an allowance for my sick minivan, tax, “doc fee,” and tag and title. The doc fee alone amounted to 25% of the allowance for the minivan.
A question surfaced that I could not ignore. What do I get for the doc fee? Every dealer charges a doc fee, I was told. Once you charge it to one customer, you have to charge it to everybody. Automobile dealerships are regulated very closely. That was my answer. Doc fees were still a mystery.
Back home, I went to my old standby–the internet. Someone in a discussion group said that a doc fee is an administrative fee. “Doc” is short for documents, they said. So, the fee covers expenses of the dealer in filling out the sales contract, loan application (if financing through the dealer), tag and title applications, and maybe a couple more forms. Reasonable doc fees are legitimate, I learned. But unreasonable fees are used to increase profits on sales, according to Edmunds.com online.
I do not advocate excessive government control over the marketplace, but hear this. I learned at Edmunds.com online that there are 10 states that regulate doc fees. The range is $45.00 in New York to $250.00 in Ohio. California allows $55.00. The average doc fee in regulated states is $109.00. In Georgia, which does not regulate doc fees, I heard of numbers from $149.00 to $599.00.
Car shoppers might be more comfortable if dealers would discuss reasonable doc fees right up front with details of what “doc fee” means. Business at an auto dealership could be much more enjoyable with a comfortable trust level between auto sales professionals and prospective buyers. Once a car cost figure is agreed upon, the doc fee should be limited to approximately $100.00, according to Edmunds.
While this article focuses primarily upon how dealers can make things better, we customers should compare apples with apples when saying, “I can get the same car somewhere else for a better price.” We should also be willing for the dealer to make a fair profit.
I confess that I became obsessed with shopping for an automobile, especially with doc fees. I might need to visit a chiropractor who can treat me for getting all bent out of shape. Then I can move on and take care of all the stuff I neglected while car shopping!
Just between you and me, I suspect some time with the Great Physician might be in order also.
Dan King Sr is a pastoral counselor and registered mediator. He may be reached at 478 272 9355.
Copyright 2011, Daniel M. King Sr. All rights reserved. Non-exclusive rights granted to The Johnson Journal for one-time publication in print and/or electronic media with ownership retained by the writer.