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hands-car-keys-cash“Doc fees,” short for “documentation or documentary fees,” are fees that may be charged by a car dealership as part of a motor vehicle sale. They are neither required nor prohibited by Massachusetts state law.

What’s the scoop on doc fees?

Doc fees generally refer to the fee a dealer charges a consumer to offset the cost of preparation of paperwork necessary to complete the sale.

  • Doc fees are considered part of the purchase price of a car and consumers should take them into account when calculating the sales tax on the purchase.
  • Doc fees can be charged regardless of whether a car is financed, and therefore, are not considered finance charges.
  • Doc fees can be any amount, but dealers will usually charge the same doc fee to each of their customers to avoid allegations of and liability for discriminatory or unfair and deceptive practices under M.G.L. c. 93A.
  • When a dealer advertises the price of a car, the doc fees must be included in the advertised price. If the dealer tries to charge more than the advertised price, it is deemed an unfair and deceptive practice under the Attorney General’s motor vehicle regulations.
  • Doc fees, if charged, should be itemized and disclosed in final pricing. A good way for a consumer to verify this is to check if the amount of the doc fee is pre-printed on the dealer’s blank Motor Vehicle Purchase Contract.

Doc fee audit:

Our Office recently contacted 100 new and used dealerships across the state and asked whether they charge a doc fee, and if so, how much the fee was, and what the fee was for.

  • 75 of the 100 dealerships reported that they charged a fee.
  • 23 reported no fee charged.
  • 2 reported that they occasionally charge a fee.
  • Fees ranged widely from $30-$599.

The dealers that charge a doc fee gave a variety of reasons for doing so, including: costs of prepping the car; preparation of paperwork related to the sale; state-imposed record storage costs; and administrative costs.

Buying a car:

It is important to remember that a doc fee is only one part of a car sale. When buying a car, consumers should focus on the total amount that they want to pay, including the listed price, finance charges, and the costs of any extras such as service contracts. Consumers who have obtained financing for the purchase of a vehicle should also pay attention to a VSI fee (Vendor Single Interest) on the paperwork.  A VSI fee is a one-time fee paid to the lender who administers the loan and functions as a type of insurance for the lender. A VSI fee should not be charged if the vehicle is purchased outright and not financed. It’s also important to check for a title fee. The dealer may obtain or help you obtain a certificate of title for your vehicle, but the dealer cannot charge more than $5 on top of the standard Registry of Motor Vehicles fee.

Remember, the focus point when buying a car should be the final price to be paid for the car at the time of the completed sale. The price of the car can be negotiated to compensate for any fees or taxes charged. Your clear and consistent communications to the dealer and sales agent about your total, bottom line cost for the car should help reduce the stress and uncertainty commonly associated with a car purchase.

More information about car buying, including protections under the Massachusetts Lemon Laws, can be found here. Find more information about financing a vehicle from the Division of Banks.

If you have additional questions, contact the Office of Consumer Affairs and Business Regulation by calling our Consumer Hotline at (617) 973-8787, or toll-free in MA at (888) 283-3757, Monday through Friday, from 9 am-4:30 pm.  Follow the Office on Facebook and Twitter, @Mass_Consumer. The Baker-Polito Administration’s Office of Consumer Affairs and Business Regulation along with its five agencies work together to achieve two goals: to protect and empower consumers through advocacy and education, and to ensure a fair playing field for all Massachusetts businesses. The Office also oversees the state’s Lemon Laws, data breach reporting, Home Improvement Contractor Programs and the state’s Do Not Call Registry.

 

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