How to Track Compliance with State Doc Fee Caps

How to Track Compliance with State Doc Fee Caps Informed

If you ever bought a car, have you ever wondered what the line item doc fees mean? Or how auto dealers determine how much to charge you for them?

What are doc fees?

Documentary fees are the fees that dealers charge consumers for the costs of closing a vehicle sale. They include fees for transferring a vehicle’s ownership; verifying, clearing and certifying vehicle titles; perfecting and satisfying liens; complying with state security and privacy requirements, and engaging in administrative and clerical services.

According to a report by the State of Connecticut, at least 15 states put a cap on dealer document fees, with allowable fees ranging from $70 to more than $560. 

A Closer Look at Doc Fees

For insight into industry compliance, Informed conducted a case study earlier this year with a large, national indirect auto lender. We examined dealer documentary fee charges in Oregon and Minnesota which have hard documentary fee caps.

Oregon state law permits a dealer to charge $150 for document processing fees if the dealer uses an integrator and $115 if the dealer does not. See ORS 822.043(4). Under Minnesota law, a dealer can charge up to $125 dollars for a documentary or a document administration fee. See statutes 168.27.31.

Informed examined 2300 deal jackets between January 2022 and March 2023, originated from 295 dealers. During the study period, Informed found 0.35% of doc fees in Minnesota and 0.47% in Oregon exceeded state law caps. Overall, fewer than 1 in 200 deals exceeded state caps. The maximum amount charged for a doc fee was $200, which exceeded the Minnesota state law cap by $75.

Our Conclusion

Though limited to two states, the study indicates that dealers are generally complying with state limits. Errors or overcharges still occur, but the overall results reflect well on the dealer community and show that, at least in these two states, dealers are complying with the law.

This study also demonstrates AI’s abilities in dealing with the complexities of state statutes’ complex language.  Because there’s a “grab-bag” of services connected with documentary fees, states use different terms to describe them, including: documentary fee, processing fee, conveyance fee, handling fee, administrative fee and doc fee.  

Leveraging a variety of technical solutions, Informed handles the vagaries and differences of state document fee laws and automates compliance with these disparate requirements.

An earlier version of this article appeared on Auto Finance News.

author avatar
Husain Radiowala and Gal Shoffet Senior Data Analyst
Husain Yusuf Radiowala is a Senior Data Analyst with Informed.IQ. He is an accomplished analytics professional with 9 years of experience in FinTech, Marketing, Sales and Supply Chain Analytics in which he leverages his expertise in Data to extract meaningful insights from complex financial datasets. Gal Shoffet is a Senior Data Analyst at Informed.IQ. He has over 6 years of experience in analytics and possesses a strong background in FinTech and AdTech which he leverages to drive informed decision making and data-driven success.

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