Serves the Commercial Small Fleet Market of 10 – 50 Vehicles

Doc Fees Run as High as $900

October 5, 2006

The cost of purchasing a car is creeping higher as more buyers are hit with high processing charges, the Wall Street Journal reports.States increasingly are passing laws that let car dealers raise the fees they charge for preparing and processing all the paperwork involved in closing a deal on a vehicle, including documents for registration, vehicle titles and license plates.Paperwork charges can now run as high as $900 in the roughly 30 states without set fees or caps on fees. The fees, often called "doc" or documentary fees, now average $400 to $700 in those states, according to estimates by automobile club AAA, compared with averaging less than $200 five years ago. In some states, the fees also can be subject to sales tax.Consumers and lawmakers in some cases are fighting the auto fees. Class-action lawsuits are pending in states such as Arkansas and Florida. A number of states from Alaska to New Jersey, meanwhile, have introduced legislation in recent years that challenges, seeks to limit or requires disclosure of such fees, according to the Wall Street Journal.The higher fees come as major turmoil in the car industry has meant thinner profit margins on new cars for dealers. The smaller profit margins have led many dealers to look to areas such as service and parts and contract fees for extra revenue.Car dealers also say they have boosted fees largely because new federal and state rules have led to more paperwork requirements over the past five years, including Gramm-Leach-Bliley Act privacy requirements and national-security requirements.Besides the new requirements, doc fees generally cover the time and manpower required to process documents for trade-ins, titles and registrations. In some states, the fees also include the costs of cleaning and inspecting a vehicle.In many states without set caps, there is little regulation of the fees besides statutes or attorney general opinions specifying that the fees should be disclosed in sales contracts and advertising. Consumer advocates say in many cases car buyers aren't aware of the fees even though they are listed on the closing documents, and don't consider them a part of negotiations. Dealers sometimes may also initially quote a low price that doesn't include the fees, meaning that car buyers find out about the added fees only as the deal is being completed.
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