![]() In our previous blog post, we discussed the basics of leasing, including the two most important elements of negotiation; selling price and money factor (finance rate). In this post, we delve into a fee standard in any vehicle lease or purchase that customers rarely acknowledge: the documentation (doc) fee. If you are negotiating both the selling price and money factor on a lease, you are off to a great start. This will help you arrive at your target monthly payment using the calculations we previously discussed. However, the doc fee can play a significant role in the quality of your lease (or purchase) deal. While every vehicle contract includes the doc fee, its not discussed in negotiations and generally not even highlighted when completing the paperwork. Dealers treat it nonchalantly, but there are certainly differences, sometimes dramatic, in the doc fees between dealers.
Putting aside states, notably NY, that cap the doc fee a dealer can charge, they tend to vary regionally like the price of gas. While its rare that at a dealer across the street from another will have a drastically different doc fee, it is absolutely the case that the average doc fee in FL will be different and higher than the average doc fee in CA. Ultimately, doc fees are an aspect of the deal that must be considered and accounted for. Let’s say you are leasing a vehicle with a $30K MSRP, and your monthly lease price is $400. If dealer one has a doc fee of $400, that is over 1% of the vehicle’s MSRP and equal to a monthly lease payment. If dealer two has a doc fee of $800, the fee is close to 3% of MSRP and equal to two lease payments. So, while your lease payment at both dealers may be exactly the same, the quality of the deal at dealer one is significantly better. In most cases, customers pay the doc fee at signing with other fees like the first month’s payment, bank fee and registration. With that said, since customers tend to equate the quality of their deal only with the monthly payment, the fee is often glossed over. While the doc fee cannot be eliminated from a deal because a dealership has to charge it consistently to each customer, you as the consumer need to know the amount and, if necessary, negotiate a lower selling price to offset the fee. On the bottom of almost all dealership vehicle listings, they include fine print something like “advertised price does not include documentation fee of $699”. Know this number going into your negotiation so you can be prepared to compare the holistic aspects of the deal to other offers you have on the table. And, definitely use it as a negotiation point so the dealer understands you are examining all aspects of the deal. In our next blog post, we will continue the theme of fees and look at some potentially unique fees a dealer may charge that you should be aware of, and know how to look for. Thanks for reading, and please let me know if you have any blog topics you would like me to cover by emailing me at [email protected]
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January 2022
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