Is the Dealer Doc Fee Really a Money Grab?
By Ted Ings, Executive Director
Perception is reality. Picture this: you’re just ironing out the deal on your brand new car.
Picking up a pen, you’re ready to sign the dotted line…when you see a few hundred dollars tacked onto the purchase price for a ‘dealer doc fee’. It’s explained to you that it’s a non-negotiable fee for processing and paperwork but, “Don’t worry, we’ve already accounted for it in the payments we’ve discussed with you.”
That probably wouldn’t sit well with you. Yet, industry-wide, it’s still common practice to charge a dealer doc fee on every new and used car purchase. But is it time for the doc fee to disappear?
It Contradicts Transparency
It’s that buzzword again: transparency. Trying to leave the ‘greasy car salesperson’ image behind, the auto industry is making huge strides toward providing an openness in the sales process, vehicle pricing, and F&I practices.
But tucking a mandatory doc fee just above the dotted line contradicts those efforts. A customer negotiates their best deal only to have an unexpected fee added to it. In many cases, there’s no explanation of what the doc fee is and why it’s mandatory. It goes against being transparent, doesn’t it?
Is it Time to Drop the Dealer Doc Fee?
How do you explain the doc fee to your customers? Is it a fee for completing the financing or the transaction documents? Or does it include added benefits like rim & tire coverage or a one-year powertrain warranty? Whether there’s anything provided to the customer or not, it looks like a money grab if it’s not optional for the purchaser!
Dealers everywhere use the dealer doc fee to pad their deal profits. It’s not a big secret anymore. The question that has to be asked is whether a dealership can both charge a doc fee and claim to be transparent in their customer interactions.