It used be be they called it dealer prep now they call it “doc fees” but anyone with a brain knows it’s just pure extra profit. Are there any dealers who don’t try to pull this scam?
It’s not a scam its just them defining part of their overhead. They never tell you what their profit is. And the only reason they do that is because naive customers let them.
I always tell dealers what my OTD (out the door) offer is. In other words I tell them the amount of the check that I am willing to write.
How they want to define their costs is up to them. I’m the customer and if they can’t tell me what the “true” price of the car is I can always find a dealer who will. Whenever the sales agent talks about the “price” of the car I occasionally remind him that he is talking about the amount of my check and not about the amount before adders. Some of them have to resort to calculators to continue negotiations but that’s OK, I’m patient.
From what I recall of my research about buying a car in MA, the doc fee is truly optional. If you want, you can take the bill of sale over to the friendly neighborhood DMV, wait in line, transfer the title and register the car, pick up your plates, and go back to the dealership to claim your car. Just like you would with a private-party sale.
That’s enough of a hassle that paying the doc fee doesn’t seem like such a bad idea, especially if you value your time very much, or if you can’t take time off work to make it to the DMV.
I’m pretty sure they would not drop the fee if I took the forms to the DMV on my own.
That probably depends on your state law. Like I said, from my research with MA laws, the doc fee has a legal maximum, and cannot be mandatory. And I’m sure there are more than a few dealers in MA that ignore such laws…
In this area the contract almost always lists a “processing fee.” It’s very mysterious and all the consumer advocates tell you it’s a junk fee, don’t pay it.
**BubbaDog **has exactly the right idea. You tell them what you’re going to pay and it doesn’t matter to you how they break out the fees.
Edmunds had a good article about out the door pricing that I can’t find right now. They basically consider doc fees to be legitimate but often trumped up. However even Edmunds says that in some states pretty much all the dealers in the State charge the legal maximum doc fee and none of them ever budge on it, so in States like that you’re probably not getting around the doc fee. That doesn’t mean you can’t negotiate your price “including doc fee.”
Of course new cars these days are so low margin for dealers that the old days of having negotiations over real money on a new car are mostly gone. The last new car I bought I did extensive research on the “True Market Value” and the price that that would put you at paying less than 50% of the country, 70% of the country, 90% of the country and etc for that car. Often times the difference between each of those bands was only a hundred dollars or so. There’s just very little negotiation room on new cars these days, they just aren’t a high margin business and despite what they tell you no dealer ever sells a car at a true loss (they might sometimes sell a car where a manufacturer incentive is what actually earns them profit, but trust me a dealer never loses money by selling a car–and they won’t sell a car at a price in which they’d lose money.)
People worry about offering too little on a car but they really shouldn’t worry. A dealer is not going to sell a car at a loss. And regardless of what his “factory invoice” says there is plenty of wiggle room on price; incentives, discounts, etc.
I don’t think it’s a “scam” for the seller of merchandise to price his goods so that his profit is maximized. Not that I love auto dealers or anything.
My impression–having done more new car shopping than I care to–is that there isn’t all that much wiggle room on the price of anything but the most in-demand cars (for instance, when the 2008 Great Gas Rape was in full bloom, dealers were demanding and getting 40% over invoice and sex with the buyer’s wife for a new Prius). Where you are made or broken is in things like warranties, financing, etc. It also has mattered a great deal to me which dealer I chose in terms of service availability and quality.
No, but it’s a bit scammy to push part of the purchase price into “fees”.
It’s a business just like any other. They exist to make money. Does it really matter what they call it?
I mean, do your shopping, read articles, negotiate etc, but in the end, the dealer either turns a profit or goes out of business, there’s simply no two ways about it.
As a consumer I just assumed all these fees just came about because we forced their hand. We write articles about how to get better deals, we learn to negotiate, we pit dealers against each other, we demand better and better deals…and now more and more of the details of a car purchase are detailed out. I mean, since day 1, it cost money to get a car from the manufacturer to the dealer, but now they put that on the invoice (etc etc etc etc for all the fees) instead of just having it all in one bottom line. Whether or not there’s some profit hidden in those fees, I’m not sure, but when you go to buy a car it always seems like the fees are the things they won’t budge on.
Anyways, I always think it’s odd that consumers seem to think business should sell everything at cost. Even at my parent’s little grocery store we get customers that, for one reason or another, know what something costs us and want us to sell it to them for that price.
Like I said, business exist to turn a profit, if you don’t like it, acquire the product on your own or find another business that sells the product cheaper. But as someone that runs a business I get so sick of people that say “I know it only costs you $10, you can sell it to me for $12 instead of $14” No, not if I want to keep the lights on.