Ohio - Dealer Documentrary Fees

[jake75]

Ohio, like many states, has an auto sale rip off not unlike an overpriced paint or fabric protection option. It's call "Documentary Fees". In Jan. 2003 I paid $50 - seemed like an almost reasonable fee for handling the title transfer paperwork (state fees are etxra).In October 2004 it was $100. Well - not happy but still not enough to complain about.In July 2007 it was $250. Now they had my attention - I realized I was being had.Here is an OP-ED article of interest.Thomas Suddes: Auto dealers aided at buyers' expenseCOLUMBUS DISPATCH, Sunday, December 23, 2007 3:21 AM By THOMAS SUDDESThis is how things really work in Columbus, where every day is Christmas if you know the right Santa:Ohio's auto dealers serve, in effect, as tax collectors. Maybe that's why the General Assembly, in effect, serves as a fee collector for auto dealers, a policy craftily tweaked by Ohio's current state budget.According to state budget office numbers, for the year that ended June 30, Ohio motor-vehicle dealers collected $922 million in sales taxes (that doesn't even count taxes on leases). That's $80 per year for every person in Ohio. That pays for a lot of state services, and dealers employ thousands of Ohioans. Overall, in economic terms, Ohio is second only to Michigan in the importance to the state of the motor-vehicle industry.Ohio law for 60 years has let businesses collect a "documentary service charge" when a buyer pays for something in installments. The first ceiling, set by the General Assembly in the 1940s, was $5. That ceiling has risen faster than a hot-air balloon, thanks to "anti-tax" Republicans and go-along, get-along Democrats. The "documentary service" maximum is now $250. And yes, credit is a privilege, not a right.But now, there's this: Sandwiched inside the state's 1,867-page budget, passed virtually unanimously in June, was sweet news for motor-vehicle dealers:The budget decreed that dealers may charge a documentary service charge not just if a vehicle is sold on an installment plan - but also if it's leased or even if buyers pay cash or arrange their own financing. That's what dealers seemingly had been doing, law or no law. That is, to suit their purposes, legislators simply decreed a gray area to be black and white.Legislators also decided there's no need to trouble consumers with boring details. So, while documentary service charges "shall be specified in writing," they can be specified "without itemization of the individual services provided."Legislators determined that a dealer "may contract for" the documentary service charge. In plain English, that means a buyer can haggle to cut or waive the fee. But there's no apparent requirement to tell car-shoppers that -- and any dealer who does tell customers has to be a candidate for sainthood. One estimate is that buyers who pay the charge without noting it or without dickering over it are paying an extra $360 million a year for motor vehicles.June's budget bill, by sheer coincidence, became law just six months into the tenure of Ohio's then-new (now ever-headlining) attorney general, Marc Dann, a Youngstown Democrat. It so happens that Dann's office has a role in enforcing the retail-sales installment law, which, by another complete ko-inky-dink, pertains to permissible document services charges. So, just in case, some Statehouse smarty maybe sold lawmakers "Dann-the-torpedoes" insurance:The House and Senate left a clue ("smoking tailpipe?") about the reasons behind the document amendment. They included "intent" wording in the budget. In the back of the phonebook-size bill, legislators harrumphed they were merely "recognizing that . . . dealers may charge, and historically have charged" for documents "in all transactions, including those . . . not involving a retail installment sale."Pruning the double-talk, somebody in Columbus got worried that, without the budget amendment, state law wasn't "clear" that motor-vehicle dealers could ask consumers for document charges not only in credit sales but also in leases and cash sales, as, "historically," they had. So, at the Statehouse, as everywhere else, "history" is written by the victors. In Ohio's case, they're called lobbies.Thomas Suddes is a former legislative reporter with The Plain Dealer in Cleveland and writes from Ohio University.tsuddes@gmail.com One should be able to buy a car and the dealer required to provide you marketable title at no extra cost. We do this in a private transaction to a buyer of a used car. Whatever costs are associated with this should be part of the advertised price of the car. IMO (and this is proteted free speech), Ohio remains a pay to play state. The Ohio legislature is generally on the take and a bunch of crooks. In addition to this rip off, they refuse to repeal minimum beer and wine markups that make distributiors and retailers above normal profits. Of course these special interest groups are very generous when it comes to donating to these legislators. Given the time, I am sure I could find many other nefarious deals.Note to businesses - if you are thinking about moving into Ohio, take Ohio's high taxes and corrupt government into account. On a personal level, Ohio has high income taxes at the state. school district, county and city level, We have an estate tax that amounts to 7% of anything over $338,000. If it were not for personal family reasons for staying here, I would move out in a nano-second.

[ProtonXX]

moving to ohio? ha ha ha ha ha ha haMy mom worked for GM n Parma. She was double city taxed(cleveland parma), State taxed & Fed, Medicare, SS taxed. Oh yea property tax too. Cuyahoga County Sales Tax is 7%. Then police sit on 1 mile tiny city stretches(independance) or in driveways (outside parma plant)for more state funds. Yu just cant winIn vegas, no state tax for the win.

[Whelan]

CT dealer fees are $500 at some places. We charges $279 at Acura. And when people would complain we would try and reason with them that you still have to pay it, they are legit to a point because it costs money to process. It's how they pay the girls who work upstairs to do all the inputting of the forms and make those courtesy calls.Sometimes we did wave them, by taking the money out from the cost of the car. But in the end the amount is still paid on the form.

[jake75]

"legit to a point"; infers not legit beyond that point. I probably don't understand how all this works, but when I buy a car and pay dealer (with my check or perhaps a check from my bank) the dealer is obligated to give me good title. In my view that ought to be part of the price and not a separate charge. I understand there is something called a MCO (manufacturer's certificate of origin) which the dealer sends to the Bureau of Motor Vechicles with instructions to issue a "Certificate of Title" in the name of the buyer. The dealer gets that back and then mails the Title to the purchaser. $50 ought to be enough to pay for the "girl's" time. If there are fees related to their floor plan financing, that is a dealer expense. When you sell a used car you just sign the title in front of a notary, give that to the purchaswer, the purchaser takes it to the BMV and they issue a new title. BMV fee is less than $10.It seems to me that the dealer could just sign the MCO in front of a notary public, give the MCO to the purchaser, and the puchaser then could go to the Bureau of Motor Vehciles to get his/her title.I bought a home for cash from a "for sale by owner" several years ago. I got a signed and notarized deed which I then took to the County Recorder's office. It cost me $28 to record the deed. I didn't need title insurace as there was no loan. I was reasonably satisfied that the title was clear but paid an attorney $100 to run a title check as a precaution.Anyway - I still wonder what is involved that should result in a $250 fee. Maybe you can educate me. Do you also charge this $279 on the sale of a used car?Notwithstanding the above, all I ask is that there be a clear and conspicous disclosure in all their advertising that added to the price will be a $250 documentary fee.

[Whelan]

it is legit, but what I meant was that the fee is incurred elsewhere int he price of the car if they removed it. i.e. if you want $500 off the car and document fees are $250 and you want them removed. Then I will just take $250 off the car to cover the document fees. Either way they are put into the cost one way or another.The way dealerships work is not extremely complicated, you just need to go in with an open mind and try and realize that not everyone in there is trying to screw you over. They are a business and need to make some profit as well. I always am fair and know they need some money as well as me getting a decent deal I am comfortable with. Unless they are offering deals like $3000 off a car, do not expect to waltz in and get $3000 off a car just because you are not budging on price. They will literally (and I have done this) tell the guy to go to any other dealer around and try and get that and if they can, great, but we are not gonna take a loss on a product that heavy.The money train comes from many different angles. I'll start from the beginning.When a car is delivered to the dealer it already has costs involved. Cost to build and cost to ship it to the location. So let's say you have a car for sale for $20,000 new MSRP. Before that car touched the dealer lot it costs probably $12,000 to build and another $1,000 to ship. These are all estimates btw. So right now you have $7,000 left. Once the car reaches the dealer you now have to pay the guy in the shop to inspect it and prep it for the lot. And pay the guy to detail it when it finally sells. Now you have to pay your salesforce, granted pennies on the dollar, but they still need to be paid. Most dealerships have whats called back end and front end money. Back end money refers to the money that they have held back for their own profit. If this car after the costs mentioned is now a $5,000 profit margin for the dealer, they will split that in someway. The money in the back is a set amount that the dealer cannot give up. It is essentially like a break even point. So if they have $3,000 in the back, that means that they will probably need about $2,000 on that car to break even, leaving the dealership with $1,000 profit, just the dealer. The managers, salesman, etc. never see that money, they are paid on a percentage of the sale based on the front end money.Front end money is what you see. The MSRP is the Manufacturers Suggested Retail Price, meaning that the dealers could charge more or less, but this is the price deemed by the maker as a fair market value. So we said we have $3,000 in back end which you cannot touch, unless your the managers brother. That leaves $2,000 in the front. This is pure profit for the dealer on top of the $1,000 they are garuanteed to make. So what you are playing with now is the salesman and the managers pay. They get say 20% of the front end. So if it is $2,000 and they sell it for full price, they made $400 on that car. So anything less you are taking money from the pockets of the salesman. Hence they fight so hard to keep that money on the car. So when you walk in for a $3,000 discount, they walk you right out and basically tell you your nuts cause in reality, there is not that much money in the cars. Typically every salesman will get a flat say $50 for each car they sold, it's like the dealer saying here's a quick bonus shot for selling a car. That way if you somehow negotiate every penny off that car, they are not screwed completely. This all falls into my belief that I like to split the difference somehow so that everyone does ok. The dealer gets paid regardless, the salesman makes a little money and I get a good deal. Now we have been talking about new cars. Used cars and pre-owned cars will always have more play money in them, so a dealer could mark up as high as $5,000 over and be able to work with the price more because it is all in house expenses that they can shift around.When you get into the business office to finalize the papers, all the warranties, wheel protection and etc. you buy adds to the profit of the salesman as well. He may get a $25 flat for each item you opt for. So moving on, I hope that kinda makes sense to some people, it's not extremely complex, but dealers are not making $10,000 off you with what you buy. Asking the dealer to split a difference when you can't meet on a number is much better than sitting there with your arms folded refusing to budge. Your buying a car, be happy, don't get miserable and frustrated with #'s. Here are a few tips:1) Never say "what's your best price", Cause when I sold cars, I pointed to the sticker and said, "there you go" My best price is where we get the most cash obviously, so be realistic. You come into the dealer looking for a car, don't just stand in the lobby, get a # and leave. Cause all you are doing is getting a deal price, going back to another dealer for them to beat it and that's it. So do a favor and don't waste their time.2) Shopping around is fine. No pressure in shopping around, heck, even tell the guy your with that your shopping, and don't be shady. If you are talking with the salesperson and he is inquiring about your price from another dealer. Wouldn't it be in your best interest to see if they can match or beat it. Heck if you go to two places and they have the same price, I guess it doesn't matter where you buy it. But if I can get you another say $500 off what the other guy is giving, then just get it instead of driving back and forth. 3) Drive the car at every dealer you go to. Regardless if you know everything about the car or not already. The road course they take you on may be different so you can get a feel for it on different roads. You may even learn something new that the other guy forgot to mention. 4) Don't expect the same leeway money from a different brand. If you are shopping an Acura vs. a BMW, don't expect that if Acura gives you $1,500 off the car, that BMW will do the same or more. Each brand and dealer has their own method of working numbers between front and back money, not to mention if they are running deals. 5) Just tell them what you wanna pay. Regardless of the price of the car and what you are trying to get off the price of the vehicle. What it all comes down to is two things. Your interest rate, and your payments. When I bought my Trix, the rates for the car were 8.99% with Toyota Financial and 7% with a Credit Union they used. I don't care who finances the car, just pay the lower one of course. If you want a certain payment they will help you get there one way or another. Just be keen. I used to have people walk in and say, I want an Acura RSX and I want to only pay $300 a month. OK...I would explain it very simple to them, 5 years---$300 per month---$15,000 car. New RSX's are going for $19k plus, not counting interest rates and all the other stuff. I would show them that we had an 03 or 04 for like $13,000 with low mileage, perfect, your in the ballpark. They would walk away still wanting a new car. I guess it takes more than one person to give a reality check cause two weeks later they would be in service with their 03 RSX from another dealer, lol. Or the people who pulled in with an 04 Hyundai Elantra that had 50,000 miles, they still owed $4,000 on it and wanted to get into a new RSX for $250 a month with $0 down. It was so easy to show them (politely of course) on a pad how that just cannot work out. Anyways, take it for what you want, but having been in the business I picked up on a lot when buying/selling cars.

[keithvibe]

somebodys fingers hurt right about now LOL good reading But I alwasy pound the hell out of the salesmen/women.The way I look at it they will say and do anything to sell a car... so they will always be shady... sorry besides I never tell them what I want to pay per month... cuz most likely they will just extend the payment period longer to meet the monthly payment goal. Nothing is worse than negative equity on a car. Granted I know what I want to pay per month but I will be damed if i tell them that... it's my goal to get the best price in my eyes for a car as it is in their eyes...

[Whelan]

I see your point, and yes my fingers do hurt a little bit. But if you want 60 months and they say well we can do it at 72, you can easily say nope and if they cannot meet it then walk away. At an extra twelve months say you have financing $300 a month, thats another $3,600. If you cannot make a payment like that happen then that $3,600 can something as simple as an extra year of pamyent to cover the interest. I think my interest accrued came to be like $2,500 total or something. I got 66 months at $343. I could have done 60 but to me 6 months is pretty much nothing, a year maybe a bit, but 6 months to get me at the payment I wanted, I took it. I also got the car for $18,000 when they advertised it for $19,100. Certified Pre Owned.

[keithvibe]

i love it when they say... what do i have to do to get you to sign today... I always say... you won't get me to sign anything today. I need to talk with my insurance agent to find out how much more or less this car will cost to insure. That sets the tone for the rest of the negeotiations. word of advise for people never buy a car you can't aford to insure.

[Whelan]

I always call my agent if I am interested in a particular car. If I know I am buying one I give him the options like I did with the Trix before I went to the dealer, got my numbers and knew where I had to be in payment.

[jake75]

Though your fingers hurt - I still didn't get educated as to what complexity in getting a title to the buyer merits a $250 (or more) fee. Again - my main beef is that this fee should be disclosed in advertising adjacent to the price of the car. Not unlike a Playboy magazine offer I received in the mail today. 12 Issues for $12. In extremely fine print at he lower right was "*Plus 33 cents delivery per issue." One from Esquire just said $6 - no strings. And it even had an insert "What a man should know" that taught me some foreign language - did you know that "Menage a trois" is French for "in your dreams"?

[Whelan]

$250 covers a few things. One the cost of processing the documents. Dealers that do in house work with registration and titles have to pay the person using the computer to do the work, then for materials. Yes I know paper and ink are not that much. But have to send copies to numerous places and the title itself costs money as it is an official document. Ever lose a title, in order to get a new one it is fairly costly.Aside from that, disclosure is not entirely necessary if it is an expected cost. Pretty much any dealer anywhere (at least from what I know) has document fees. It's part of the process. And if they disclosed everything in the ad, you would not have an ad. They advertise for $300, no money down lease. The only thing in small print is the length or term of say 36 months.OK so they forgot to also then mention, that they have say document fees on there sale, that the deal is based on your credit history and if your approved. Also that you are only getting a particular model say its the LX model with just power options, no AC, no CD, no moonroof etc. That would all be extra. Oh, and it only applies to cars that are on the lot, not ones that need to be special ordered or are brought in from another dealer to make the sale.

[jake75]

Sorry - this is still too vague to make any sense - processing documents, send copies to numerous places. I draft a simple will, power of attorney, and health care documents for clients and notarize/supervise the execution for $180. There is a lot more time and responsibility involved in my work.I assume the dealer buys the vehicle from the manufacturer and then sells it to the buyer. Doesn't the dealer get a document that is essentially "title" from the manufacturer. I have seen something referred to as a "Manufacturer's Certificate of Origin". Why is it more difficult for a dealer to transfer title of a new vehicle to a buyer than it is for an individiual to transfer title to a buyer in a private sale. In the latter situation, all the buyer has to do is entrer the price and mileage, name/address of buyer, and sign in front of a notary. The buyer pays about $10 to transfer and get new title at the BMV office. The buyer also pays the sales tax at that time. [Dealer pays sales tax collected from buyer directly but they get a discount from the state for handling that.]Titles are not costly. When my father died we could not find the title to his automobile. It cost me only $5 to get a replacement at Ohio BMV. Car Max lists all costs including Document processing costs on their website. I checked one of their locations and it was $149.

[Whelan]

Different states have different rules and limits. In Connecticut it is a state law that a dealer cannot charge more than $500 for document fees. So one dealer may be $200 another may be $300. It all varies, they are specified by the dealer. If you want, you can totally request that they list out the individual expenses and costs associated with that fee, totally worth it. As for the title. In CT it costs about $50-70 for a replacement title. Transferring is another story, it costs $10 to transfer a title and another $5 to process the bill of sale.The title is not from the manufacturer. Those certificate or origins simply state where the car was built and some specs. The Title is governed by each individual state so the dealership must obtain the titles through their local DMV. As stated, some dealerships do not have the DMV computer system on site so things like registration and such need to be taken to a DMV office to have completed and then brought back for the buyer to sign.When I bought my car in Mass. I could not take it home that day, they had to bring it to CT, one of their guys drove it from the dealer. Get it registered in CT and pay for an inspection, then I was able to take it. If you have on site Registration, like most dealerships do nowadays, you still have to have the supplies and print materials to create a title for a car. The rule is that if the car is on the lot, then it has to have the Title at the dealership. Whenever we bought cars from auctions or wherever, we would have to take in the title in house first before we could sell that vehicle. The bank also comes by once a month randomly to do a lot inventory. They have the dealers cost of each car that we loan out from the bank as the bank actually owns all the cars on the lot. So if we have to have say 8 million in inventory on the lot, then if they come by and we have say $850,000, and we cannot account for the sale of that car, then we can get really screwed.One other thing about document fees. It also covers the costs of all documents you sign. So any bills of sale, registration, financing forms, all of it. Basically when you get that form and start signing things. Each one of those forms processing is included in that cost.Granted some dealerships, or as people call them, stealerships, charge way too much for those fees. But typically anything close to the $250 mark in CT is considered normal. But again this varies by state.