Dealerships And Documentation Preparation Fees Explained

Why a Doc Prep Fee?
 
The Documentary Preparation Fee, also known as the "doc prep fee," is allowed by Massachusetts law to be collected from vehicle purchasers by Massachusetts dealers. The fee is charged to offset the costs incurred by the dealership in processing various paperwork associated with a sale or lease that are separate from those paid to acquire the vehicle. The doc prep fee recognizes some of the costs related to a dealer's compliance with federal and state laws and regulations that provide for safety, consumer protection, Anti-theft measures, vehicle history checks, notifications, certifications, and official filings.     

Regulations and Responsibilities?
Massachusetts' dealers take them seriously. 

Dealers must prepare and process many documents on each sale or lease transaction. Collection of the doc prep fee consists of passing on to the customer the costs incurred in doing the following: preparing a P&S, an appraisal document, odometer statements, insurance verifications, etc.; storing or archiving documents; and personnel and computer costs associated with these tasks. However, the costs related to financing for the deal (i.e. obtaining and processing credit applications, processing the retail installment sale contract, etc.) by law cannot be included in the doc prep fee.

Not all transactions involve the same services, but all transactions must meet many legal requirements as detailed in the documents provided to the customer. Actual expenses incurred and recovered through the documentary preparation fee, as well as the size of the fee, may vary by dealer, location, and transaction. Customers must be aware that no portion of the dealer's doc prep fee is required by or remitted to any state or federal agency. Further, the doc prep fee has nothing to do with the Title Preparation Fee, which is stated as a separate line item on the sales contract. (It is capped by law at $5.)