What Is a Doc Fee When Buying a Car?by Karin Barga
Car dealerships do not charge a "dock" fee, like as a reference to cargo, but rather a "doc" fee, as in documentation. Dealers collect these as a sort of administrative fee, ranging anywhere from $45 to $1,200.
Doc processing fees began as a means of increasing net profit minus commissions. Their sole purpose was to add bulk to the bottom line that could not be touched by sales staff commission. Originally, doc fees were so minimal that customers and staff never questioned them.
The state of Delaware regulates motor vehicle fees, allowing 3.75 percent of the purchase price or National Automobile Dealers Association (NADA) book value, whichever is greater. Unfortunately not all states regulate these fees. In unregulated states, dealerships may offer appealing sales prices and only apply the doc fee when drawing up the contract.
The average advertised doc fee is $399 per vehicle. If a dealership sells 2,000 automobiles per year with a $399 doc fee attached to each, its completely non-commissionable profit is $798,000.
Many states regulate doc fees, at the very least by capping how much a dealership can charge. If you are in an unregulated state and the doc fee is beyond $100, consider it excessive and address it immediately. Liken doc fees to being charged a $20 fee each time you shop at your favorite clothing store with the explanation that this fee covers employees' administrative responsibilities.
If a car dealer charges outrageous doc fees, report it to your state representative. Until legislation passes to ban these exorbitant charges, car dealerships will continue collecting an easy profit on each sale.
- signing a contract image by William Berry from Fotolia.com