Bill capping car dealership processing fees head to House

A proposed law would cap processing fees by car dealers at $475. (Photo by Antoni Shkraba/Pexels)

Whether it be buying tickets to a favorite artist or sports team, paying a parking ticket, or even gifting a car to a family member, the public is hit with pesky processing fees that inflate their purchase costs.

Delaware has no cap on motor vehicle dealer processing fees, which permits dealers to arbitrarily charge whatever amounts they wish leading to great discrepancy of these fees among dealers and a lack of protection for consumers.

House Bill 295, sponsored by  Rep. Paul Baumbach, D-Newark, would place a cap of $475 on the dealer processing fee, which is similar to neighboring states Pennsylvania ($449) and Marland ($500).

In Tuesday’s House Public Safety & Homeland Security Committee meeting, Baumbach said the idea for the bill arose when Senate President Pro Tempore Dave Sokola, D-Newark, purchased a car recently and was hit with a $600 processing fee.

He said the average processing fee in Delaware is $475, which matches the cap included in the bill.

Committee Chair Rep. Franklin Cooke, D-New Castle, wanted to make sure the Division of Motor Vehicles approved the bill, which Baumbach confirmed.

HB 295 also defines “dealer processing fee” as an amount charged by a dealer for any of the following:

• The preparation of written documentation concerning the buying, selling or exchange of the vehicle.
• Obtaining the title and license plates for the vehicle.
• Obtaining a release of lien.
• Filing title documents with the Department of Transportation.
• Retaining documents concerning the buying, selling or exchange of the vehicle.
• Complying with federal or state privacy laws.
• Other administrative services concerning the buying, selling or exchange of the vehicle.

There is no fiscal impact on the state if the bill becomes law.

HB 295 was voted for unanimously and will now head to the House floor for consideration.

Also discussed in Tuesday’s hearing was House Bill 19, sponsored by Rep. Eric Morrison, D-Glasgow, which would create a background special license plate for the United Way of Delaware Pride Council.

A background special license plate supports a cause and is available for purchase by the public. The numbers, letters or both, assigned must be the same as the license plate assigned to the owner’s vehicle at the time of the application for the plate. 

The plates would cost a one-time fee of $50, and $35 of that would go to the Pride Council.

HB 19 also heads to the House floor to be voted on by the entire chamber.

Jarek Rutz

Raised in Doylestown, Pennsylvania, Jarek earned a B.A. in journalism and a B.A. in political science from Temple University in 2021. After running CNN’s Michael Smerconish’s YouTube channel, Jarek became a reporter for the Bucks County Herald before joining Delaware LIVE News.