Driving may get even more expensive in California
California’s state Senate has approved legislation allowing car dealers to charge buyers up to 1% of a vehicle’s purchase price in document processing fees, with a $500 cap. This $500 limit represents an increase of nearly 500% from the current cap of $85, and the average starting price of a new car in May was $48,656, Cox Automotive reports.
The bill passed with only one Senator voting against it, and its supporters, including California’s New Car Dealers Association, say the fee is necessary since the $85 cap hasn’t kept pace with the state’s rising business costs over the decades. Processing paperwork that the added costs would help pay for includes loan documents, fraud protection forms, and Department of Motor Vehicles registration. Anthony Samson, the California New Car Dealers Association’s lobbyist, said in April that other businesses can recoup similar costs through service charges, but dealers can’t. “If we believed we could simply recover our costs and the price of the vehicle, I assure you that we would not be here today asking for your support on this measure,” Samson said, according to Cal Matters.
However, Senator Dave Cortese said he’s working with the California New Car Dealers Association to lower the fee’s ceiling when it’s heard in the Assembly. Senator Henry Stern was the only Senator who voted against the bill, noting he feels that car sellers have undermined the state’s efforts to protect consumers and the environment with actions like lobbying for the U.S. Senate to pass federal legislation blocking California’s electric vehicle mandates.
Not everyone is on board with this idea
“The car dealers haven’t earned the trust to justify this major increase in junk fees,” Stern said, according to Cal Matters. Ray Shefska, CarEdge Co-Founder, added that “This bill reinforces that in America, whether it be national, state, or local, we have the best politicians money can buy. When things are already barely affordable, let’s by all means make it even more difficult for people buying cars in California.” The California New Car Dealers Association has donated $2.9 million to the state’s lawmakers since 2015, according to Digital Democracy’s database.
One California Senator, Carolyn Menjivar, didn’t vote on Tuesday but stated: “If we’re looking to help everyday Californians with affordability, why are we looking at helping an industry that is making a healthy profit?” California is one of the most expensive states to buy a car since it charges the highest sales tax rate at 7.25% and imposes significant registration fees. The document processing fees vote occurred amid reports of auto dealers using incentive strategies to sustain profits without raising vehicle prices in reaction to Trump’s tariffs. State government vehicle purchases are exempt from the document charge.
Final thoughts
House Assembly members still have to vote on the car dealer fees bill before it heads to California’s Governor for approval or veto. If the House Assembly approves the legislation in its current form, a $500 cap could increase Governor Newsom’s chances of vetoing it. Florida has the highest car dealer document fees in the U.S., with its $999 cap, followed by Virginia at $799, and Colorado registering third at $699.
