Tales From The Cooler: California "Helps" Car Buyers By Raising Documentation Fee

Virgil Hilts
by Virgil Hilts
tales from the cooler california helps car buyers by raising documentation fee

Despite the Golden State being 16 billion dollars upside down and spinning towards bankruptcy, its legislators still find time to concoct regulations to confound the thousands of franchised and independent auto dealers within its borders. These statutes are always enacted to “protect the consumer.” That may not be the case this time.

Effective July 1, California Law AB 1215 will allow dealers to charge car buyers up to $80 for the so-called documentation fee, up from the previous $55 cap. This charge, rationalized by the retailers as needed to “process your paperwork,” is universally loathed by customers. Most states do not regulate this cost, leading to tales of retailers extracting up to $495 for this phantom fee.

InCalifornia’s case, the increase came as a trade-off to ease the pain of several new regulations for their dealers, despite them already being burdened with more DMV laws and paperwork than in any other state. The silliest one is designed to help car buyers know when they are purchasing a unit with a branded title – a vehicle that has been totaled and rebuilt, been in a flood, or is a manufacturer’s “Lemon Law” buyback.

There are strict state and federal disclosure requirements and severe penalties already in place for failing to disclose a branded title vehicle. But that is not good enough for Sacramento. AB1215 requires dealers to place red stickers on each such car, alerting consumers to the branded title.

California reckons that the slimy lot owner who is falsifying, or “washing,” titles on his rebuilt wrecks is going to think, “Well, they got me now. When I put those red stickers on my salvage cars, everybody will know. Dang it!”

These new laws means all automotive lenders have to rewrite and distribute new retail and lease contracts to California car dealers, reflecting these changes. The banks also have to make some monumental verbiage changes to the contracts, such as:

  • Change “Document Preparation Fee” to “Document Processing Charge”
  • Change “License Fee” to “Vehicle License Fee”
  • Change “Smog Fee” to “Emissions Testing Charge”

Over the past few months, thousands of man hours and millions of dollars have been spent by lenders and dealers’ computer programming companies as they scramble to arm the dealerships with the new paperwork.

The problem is that after July 1, there will be many dealer finance managers who either missed the memo or are so busy selling their clients warranties or paint protection that they will accidentally use the old retail or lease contract. When they submit it to the lender, it will be summarily rejected, meaning the dealership will have to bring the client back into the store to sign the correct contract, one of the most tricky transactions for both car buyer and car dealer.

And that unhappy buyer had just paid $80 to ensure the dealer did the paperwork correctly….

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2 of 16 comments
  • Fr88 Fr88 on Jul 05, 2012

    Just bought a car from a dealer in Atlanta, so I am making a "Top This" submission. Palmer Dodge here has a "mandatory" $599 doc fee - "It's printed on our purchase forms and is part of our computer program." Should have walked out the door at that point, because it was a harbinger of things to come. Nonetheless, we negotiated a price that included an additional $599 discount AFTER a healthy discount from sticker has been settled upon. I won't bore readers with the ugly saga with the delivery of the car and a paperwork error on their part - a documentation error that delayed obtaining my registration until the last day of my 30 day tag - but just say that it was all worth it for my new Charger. Outstanding vehicle. Plus, thankfully there are three other Dodge dealers in the area so I never have to darken the door of Palmer Dodge again. Dealers are so short-sighted when they pull crap like $599 doc fees. This fee was a big part of how this dealer poisoned my experience of buying a new car to the degree that I will never do business with them again. But I must thank them because they taught me that any dealer that starts all their transactions with a $599 up-charge for a phony doc fee is by definition not a company a person would ever want to do business with. Moral of the story: After the salesman says hello, ask what the dealer's doc fee is. If it is more than $50-$100, just turn around and walk out the door. Nothing good can come from any further conversation.

  • Aunt_slappy Aunt_slappy on Jul 06, 2012

    Cal Worthington! I haven't lived in Ca for 22 years but I grew up with his commercials, and those of Ralph Williams, who as I remember used to have his dog on the commercials in which he appeared. Then Cal started making fun of Ralph by having all sorts of animals in his commercials and introducing them as his dog "Spot". He even had an elephant one time. I clicked on this post because of the picture of Cal, thanks for the memory.

  • Inside Looking Out This is actually the answer to the question I asked not that long ago.
  • Inside Looking Out Regarding "narrow windows" - the trend is that windows will eventually be replaced by big OLED screens displaying some exotic place or may even other planet.
  • Robert I have had 4th gen 1996 model for many years and enjoy driving as much now as when I first purchased it - has 190 hp variant with just the right amount of power for most all driving situations!
  • ToolGuy Meanwhile in Germany...
  • Donald More stuff to break god I love having a nanny in my truck... find a good tuner and you can remove most of the stupid stuff they add like this and auto park when the doors open stupid stuff like that