Hi,

I am planning on going to the dealer this weekend... What the hell is a documentation fee and why is that fee almost $250? Can you negotiate that? The dealer wrote it down on my estimate and I will highly object that one.

Thank you.

 

The Documentation Fee is a charge that the finance company levies on the dealership in order to process all the paperwork to extend the loan to you. It's generally non-negotiable.

However, it's also generally not so damn high. A dealer is only entitled to charge a "reasonable" documentation fee. $50 is much more common, $250 is downright excessive.

 

I think a lot of dealers are lumping in actual documentation costs with built-in profit on those fees. Around here, $300 isn't unusual. Just figure it in to your negotiations rather than letting the dealer tack it on arbitrarily at the end. Ultimately, everything's negotiable in a new car transaction, though the dealers will try to say this fee isn't.

 

Just think of it as a "profit" fee that is added to the price of the car. Find out what invoice is and tell them you don't want to pay more than that.

 

Yeah, that's where I am confused. I want to start a bargain with a dealer BUT I would like to keep some cards hidden. So I'll get the dealer to accept a price and then I can throw the incentives that I have. I'll put a "reasonable" documentation fee as one of them.

 

This added to my deal after I had negotiated the best price. Th sales manager said that no one was able to avoid paying it.

 

I'd always read that you should never pay the documentation fee, but I can't vouch for that position. Essentially, the way I understood it, is that you're paying for the dealer to fill out forms.

When I bought my 8, they charged me (I think $40, not a big amount considering the cost of the car). I complained, the guy said that they HAD TO charge it-- everybody is charged. So, he said that if I promised to give the salesman a perfect score on the survey he'd lower the price of the car by the amount of the doc fee (since he couldn't delete the fee itself).

 

Where you have to be careful on doc fees is on cars like Scion that have non-negotiable prices. Toyota dealers in Alabama have been getting away with high doc fees for years (~$400). If you are close to another state, a short drive can save you $300. Always ask upfront about added charges like doc fees, administration charges etc. before you agree to a final price.

 

Did lowering the score of the salesman help you?

 

Doc fee = extra dealer profit

Around here, some have gotten out of control with $300-500 fees being charged. Most dealers have this pre-printed on the forms - this implies it can't be changed. In fact, this is what they are charging you to title and get tages for your car - and we all know they have some miniumum wage go-fer stand in line at the DMV to do this.

I recently got a new car for my wife and what I did was get quotes from the dealers that included the car, destination (you would be surprised how many leave this out of a quote if you don't ask), and any dealer or doc fees. Then it didn't matter what they called it or how much it was, the bottom line was what counted. In our case we the dealer we went with charged a $298 doc fee but to get out business they discounted the car $198 more than the dealer with the $100 doc fee :D

Dennis

 

Document fees are pure dealer profit. They charge them because they sound important and most people don't question them. Supposedly, they cover the "paperwork" that has to be done to sell you the car- but there is no way it costs the dealer more than about $30 in time to prepare and file all that stuff. Most will drop them if you argue enough, though I do know of several dealers that are part of corporations that will let you walk over it. There is no reason for it to be that high.

 

This is why you deal with OTD prices (out the door) so you can effectively compare prices between dealers. Just start calling all the dealers within X distance from you and have them fax their best price. Get a free efax.com fax number so you can have the faxes emailed to you. Keep going back and forth between dealers to see who will give you the best price.