Why Do I Have to Pay a ‘Dealer Prep’ Fee?

John Paul, aka “the Car Doctor,’’ answers readers’ car-related questions.

Q. I’m buying a new Mustang GT from a local Ford dealer as part of the sale of the new car there is a “documentation/dealer prep’’ charge of $250. I don’t object to the fee however the business manager at the dealership says sales tax on $249 is added to the cost of the car raising the sales tax $15.56. After reading your column where you were asked about labor and tax you responded: “according to Commonwealth of Massachusetts, charges for personal or professional services such as accounting insurance legal and medical services, as well as services such as haircuts and labor for car repairs are not taxable.’’ I’m closing on my deal soon, it’s only short money but I think the business manager is “ripping’’ me off. What do you think?

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A. The answer surprised me as well. In Massachusetts the documentation fee is considered part of the purchase price of the car and is in fact taxable. According to the Massachusetts Department of Revenue “Separately stated document preparation fees and title preparation fees charged by a motor vehicle dealer in connection with the sale of a motor vehicle are part of the sales price subject to sales tax, regardless of whether they are paid at the time of the sale or financed’’

Q. My wife and I are struggling to decide on a small SUV. We replaced her 2006 Honda Pilot in January with a new Toyota Highlander. We love it, but she feels it is too big for her, so I have taken that over and she would like a smaller SUV. We’ve driven the CRV EXL, RAV4, Subaru Forester, and Mazda CX5. The Honda and Subaru came out on top, and the CX5 is still in the running. Our impressions so far are, the Forester, seemed lacking in power and the CVT was noisy under acceleration. The CRV had poor visibility out the rear, unexciting styling, and my wife thought the front seats felt cramped. The Mazda CX5, had much fewer features and you needed to step up to the Grand Touring model which made it pricier than the other two cars. Do you have any suggestions on why one would be our best choice?

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A. You certainly summed up these vehicles and I agree with all you said. The one not included on your list was the RAV4. I found the recent RAV4 to be a much better vehicle than older models and for the first time I felt it was competitive with the CR-V. That said, for me I think the CR-V is still the winner, it offer Honda’s legendary quality, great use of space and very good re-sale value. All the vehicles are good but I would rank them as CR-V, RAV4, Forester and CX5.

Q. I had the catalytic converter replaced on my 2005 Chevy Cobalt in order to be rid of the “check engine light’’ which has been on for a few years. After driving it back and forth to my two jobs for the last two weeks the light is still on. Do you think I need to drive it continuously without stopping for at least a couple of hours to get the light to go out? Do you think the better quality catalytic convertor would make the light go off?

A. Aftermarket catalytic convertors can be a challenge. I have seen some that work perfectly and others are just not up to the task. The catalytic convertor monitor does require specific conditions before it will set. This could include highway driving for 15-20 minutes. In addition if there are other codes those issues may need to be repaired before the catalytic convertor monitor will set.

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Q. I am considering purchasing a used car located at a dealer in St. Louis. The big consideration is that it’s only being offered with a Bill of Sale only-no title. Given that this car is now 20 years old, do I need the title to register the car here in Connecticut? And if I do need the title to register the car, can I obtain a replacement title if I have full provenance regarding ownership of the vehicle in question and the Bill of Sale.

A. The following is from the Connecticut DMV website: The State of Connecticut no longer requires title certificates for vehicles that are older than 20 model years. In order for you to register the vehicle, you must have a Supplemental Assignment of Ownership (form Q-1 available on the DMV website) and a copy of the last registration certificate. You must show continuity of ownership from the last registered owner to you. If you have any question or concerns you should contact the CT DMV before you purchase the car..

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