A Message from VADA President and CEO Don Hall
September 2025
Every few years, I get a similar email forwarded from a Virginia lawmaker. Once again, a constituent has filed a complaint about dealer processing fees, and the lawmaker comes to us for insight.
Before I get into it, let’s all take a step back and understand that today’s consumers are much more skeptical about fees in general. We must accept this fact before we can clearly explain the fee.
As dealers, it is your responsibility to inform your customers and be transparent about what these fees are (and are not).
When it comes to employee time, the fee covers the many tasks necessary in processing a sales transaction; processing trades, assisting with canceled products, tracking down title documents, managing and perfecting liens, and preparing and filing required documents, just to name a few.
Most critically in today’s world, these fees also cover the cost of protecting consumer data that is an increasingly large expense for dealers. Local auto dealers are required to provide largely the same data protection as big banks and retailers. This is an important service for the consumer, providing them peace of mind about their sensitive financial details.
Dealers, of course, aren’t the only industry that charges fees, and ours are no different from what an attorney or accountant may charge for the services that are provided.
VADA has compiled an informative document detailing the importance of processing fees and what it covers. Take a look, print it out, and share it with your customers.
The difference for dealers is transparency. Virginia Code requires that when an auto dealer charges a fee, the cost must be disclosed both in every advertisement and in the showroom in a conspicuous manner and it must be printed on the Buyer’s Order. This ensures the customer is not surprised in any way by the fee. Other service providers do not have to disclose fees they will charge in their advertising or on the walls of their offices, nor do they have to pay taxes on those fees.
Historically, the number of complaints to the Motor Vehicle Dealer Board has been negligible when it comes to processing fees. I can guarantee you that the regulators covering other industries that don’t have our transparency requirements receive far more complaints on fees.
Why not cap the fees as some states do? Based on our many conversations with members of the General Assembly, it is in everyone’s interest not to cap fees. Artificially capping fees limits the incentives for providing extraordinary and unlimited services to buyers of motor vehicles. Notably, the legislatures in those states that have capped fees are constantly having to increase those caps because the cost of doing business increases yearly and with increased regulatory overreach. Often times, in states with capped fees the dealers in the state charge the same fee, whereas in Virginia, dealers all over the state charge differing fees allowing the Virginia consumer to shop and negotiate more freely in a competing market.
Once disclosed, an auto dealer is permitted to charge the fee in an amount that the market will bear. Consumers are free to negotiate the fee with the dealer or take their business elsewhere if they so choose. That is the free market at work.
Processing fees are not an arbitrary add-on, but an investment in consumer protection, convenience, and trust. And so it is critical that dealers can not only explain the processing fee, but justify it. Do time and cost studies to understand how this fee covers your team’s time and skillsets. If a lawmaker or regulator comes calling, you’ll be able to defend the price tag.
When families in Virginia buy a car, they deserve to know two things: that the price is fair, and that their personal information is safe. If we can promise both, then we have done right by them. If we cannot, then we have failed the very people who count on us.
