What’s the Deal with Doc Fees?


Fees have been a point of contention for automotive and recreational dealers for decades now. With a plethora of different fees being disguised under different names, it is hard to know exactly what you are paying for. In some cases a dealer may be up front with fees. Others choose to use fine print. In the worst case, others may skirt the law and hide the fee entirely. In every case the buyer has the power so if you aren’t comfortable - question everything.



What is a Doc Fee?

A doc or documentation fee can go under many different pseudonyms. It may be charged as an admin fee, paperwork fee, processing fee, dealer fee or service fee. Regardless of the name – the premise of the doc fee is to cover the costs of back-office work. This work may include paperwork costs, vehicle report costs, contract writing and legal costs, registration costs, licensing costs and long-term document storage costs. A doc fee may range anywhere from a few hundred dollars to well into four digits.


In todays world of rising costs, many dealerships (along with other industries) have taken on a fee model to help remain competitive in local markets. The unfortunate side effect of a fee-centric model is that a consumer may not realize that the lowest price you find isn’t necessarily the best price. As an example, see the following dealer listings I found on KIJIJI today for the 2022 Harley Davidson Street Glide ST.

At quick glance it would be obvious as to which one is the best price. But upon further inspection of the listings – only listing #1 at $41,199 shows the total price including all fees. Listing #3 at $37,699 indicates in the description that “price includes paint” and outlines its fees for a grand total of $40,633 plus taxes. Listing #2 is the most vague with zero mention of any fees and even going as far as to say what options the bike “may include”.


Our World of Fees


The sometimes sad truth in a fee centric economy is that in order for some businesses to be competitive, price manipulation is the only route. Recently we’ve seen a number of new fees pop up in our everyday lives. Places that used to have free parking are now charging. Hotels have “resort fees” and “accommodation tax”. Even restaurants are seeing service, convenience and seating fees being charged in popular tourist destinations.

The question is – why? The answer is quite simple. People are inherently bargain hunters, always looking for the best deal. If one hotel can advertise room rates at a much lower price than their neighbors, surely people will flock to it. It has been proven in Las Vegas that having “no resort fee” is not the optimal route which is why nearly every resort there now charges it. One simply can’t compete with the lowest advertised price. This goes hand-in-hand with the automotive industry. When you’re shopping for anything – whether it be a car, motorcycle, ATV, boat or RV – you’re always going to gravitate to the best looking deal. The first doc fees are on record as being implemented as early as the 1960s. Here is an example in advertising that may resonate with you …

Two dealers have the exact same motorcycle. Identical, no difference whatsoever ...


While both dealers were up front on fees and the total price is identical – the one listed at $13,999 will almost always get first look over the $14,599 one. The reason being is that we have accepted that we are paying fees either way and many simply ignore reading the fine print as to what a specific dealer charges even though the charge can vary widely. In some cases the advertisement may have you "see in store" or "see our website" for details on the fees as well.


Are Documentation or Administration Fees Legal?


Documentation fees are legal in most cases. Where the situation muddies is when a dealership chooses to entirely hide their doc fee. Depending on location, a dealership may be able to disclose fees in fine print but ultimately must have an option to buy the unit at the price they advertise plus tax.


The Best Way to Expose, Negotiate or Refuse to Pay Doc Fees


In this section we break down three factors in understanding your doc fee prior to moving forward on a purchase. Those are – exposing the fees, negotiating the fees and refusing the fees.


Exposing the fees should be as simple as asking, so long as you are dealing with an honest dealer. Ask for a “signed offer to purchase outlining all costs”. From there they should provide you with what looks similar to a bill of sale with a full breakdown of fees and taxes. If a dealer tries to add fees that aren’t discussed after providing this document – my recommendation would be to run for the hills as this is incredibly deceiving.


Negotiating the fees may or may not be possible. As mentioned prior – the fees are, in most cases, already factored into the price that the dealer is asking on the unit. The better bet would be to try and negotiate the pricing of the unit itself to where you are comfortable paying price plus fees. Dealers may also be able to offer free add-ons such as delivery, fuel cards, upgrades or warranty protection. If they won’t budge on the price – try inquiring about those items and see if they can give you a bit of extra value.


Refusing to pay fees, in most cases, is not going to be an option. The power is fully yours to try another dealer but it is important to keep in mind that you’re likely to find yourself in a similar situation. Again, I would recommend trying to negotiate the actual unit price to where you are comfortable with the all-in pricing.


Doc Fee Scams to Watch Out For


It is important to keep an eye out for dealers trying to pull one over on you. We would love to believe that everybody is running an honest business but history has taught us otherwise. Here are a few scams directly related to fees to keep an eye out for:


“Floating” doc fees. So you’ve managed to talk that dealer into giving you a sweet deal on the pricing of a unit in their inventory. Congrats, but be careful. If a dealer hasn’t disclosed the fees by now – you could end up paying a higher than normal doc fee to offset those savings. To avoid this - always get the dealer to disclose their fees, THEN negotiate pricing. I would suggest doing so via email or written form as well so you have a binding agreement.

Bad Credit Surcharges. Dealer doc fees have a wide range but typically fall around the $500 mark give or take a few hundred dollars. We have seen dealers charge well over $1000 in the past. Unfortunately this tends to take place with customers who may have poor, damaged credit and are trying to get back on track. While a lender may have a dynamic sliding fee scale based on risk, a dealer doesn’t take on any further risk based on credit and thus should have a static fee.

Double Charging. Always double check the bill of sale to ensure that the dealer isn’t charging multiple doc fees under different names. If a dealership has a charge for “doc fee” and another charge for “admin fee” – question it every time. Remember that the power is yours to ask questions and understand your costs.

Fees on Trades. When trading in a unit, have the dealer give you the all-in value of your trade as-is. Some dealers will inflate their trade offer so as to lure you in and then hit you with fees at the tail end of the deal. If a dealer sees work that needs to be done, they should be reflecting that in the price offered. This is something to consider when calling or emailing dealerships in regards to trading in. Always ask if they charge trade-in fees.


The Bottom Line


The reality is that doc fees are almost certainly going to be a part of your purchase. Understanding the doc fee is an important asset to have when shopping. Remember that you, the buyer, are the one with the power. Know your numbers entirely and realize what you are paying for. Ask questions until you feel comfortable with the answers. Thanks for reading!


Fred


Article written with the help from our sponsor partners at Revival Powersports


 

Our sponsor partner Revival Powersports is proud to serve all of Canada with full transparency up-front. Their doc fees are static at $399 for in-stock inventory and $499 to finance private sales.

 

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