diff --git a/README.md b/README.md
index b9e62d54b3..1f756ca31b 100644
--- a/README.md
+++ b/README.md
@@ -1161,14 +1161,11 @@ # Save all videos under YouTube directory in your home directory
 
 You can use `--ignore-config` if you want to disable all configuration files for a particular yt-dlp run. If `--ignore-config` is found inside any configuration file, no further configuration will be loaded. For example, having the option in the portable configuration file prevents loading of home, user, and system configurations. Additionally, (for backward compatibility) if `--ignore-config` is found inside the system configuration file, the user configuration is not loaded.
 
-### Specifying encoding of config files
+### Config file encoding
 
-By default, config files are read in the encoding from system locale.
-If you saved your config file in a different encoding than that, you may write `# coding: ENCODING` to the beginning of the file. (e.g. `# coding: shift-jis`)
+The config files are decoded according to the UTF BOM if present, and in the encoding from system locale otherwise.
 
-There must not be any characters before that, including spaces.
-
-If you have BOM enabled, it will be used instead.
+If you want your file to be decoded differently, add `# coding: ENCODING` to the beginning of the file (e.g. `# coding: shift-jis`). There must be no characters before that, even spaces or BOM.
 
 ### Authentication with `.netrc` file
 
diff --git a/test/test_utils.py b/test/test_utils.py
index c668ff9e42..bf46bdc617 100644
--- a/test/test_utils.py
+++ b/test/test_utils.py
@@ -1831,24 +1831,16 @@ def test_determine_file_encoding(self):
         self.assertEqual(determine_file_encoding(b'\x00\x00\xfe\xff'), ('utf-32-be', 4))
         self.assertEqual(determine_file_encoding(b'\xff\xfe'), ('utf-16-le', 2))
 
-        self.assertEqual(determine_file_encoding(b'# -*- coding: cp932 -*-'), ('cp932', 0))
-        self.assertEqual(determine_file_encoding(b'# -*- coding: cp932 -*-\n'), ('cp932', 0))
-        self.assertEqual(determine_file_encoding(b'# -*- coding: cp932 -*-\r\n'), ('cp932', 0))
+        self.assertEqual(determine_file_encoding(b'\xff\xfe# coding: utf-8\n--verbose'), ('utf-16-le', 2))
 
         self.assertEqual(determine_file_encoding(b'# coding: utf-8\n--verbose'), ('utf-8', 0))
         self.assertEqual(determine_file_encoding(b'# coding: someencodinghere-12345\n--verbose'), ('someencodinghere-12345', 0))
 
-        self.assertEqual(determine_file_encoding(b'# vi: set fileencoding=cp932'), ('cp932', 0))
-        self.assertEqual(determine_file_encoding(b'# vi: set fileencoding=cp932\n'), ('cp932', 0))
-        self.assertEqual(determine_file_encoding(b'# vi: set fileencoding=cp932\r\n'), ('cp932', 0))
-        self.assertEqual(determine_file_encoding(b'# vi: set fileencoding=cp932,euc-jp\r\n'), ('cp932', 0))
+        self.assertEqual(determine_file_encoding(b'#coding:utf-8\n--verbose'), ('utf-8', 0))
+        self.assertEqual(determine_file_encoding(b'#  coding:   utf-8   \r\n--verbose'), ('utf-8', 0))
 
-        self.assertEqual(determine_file_encoding(
-            b'\0\0\0#\0\0\0 \0\0\0c\0\0\0o\0\0\0d\0\0\0i\0\0\0n\0\0\0g\0\0\0:\0\0\0 \0\0\0u\0\0\0t\0\0\0f\0\0\0-\0\0\x003\0\0\x002\0\0\0-\0\0\0b\0\0\0e'),
-            ('utf-32-be', 0))
-        self.assertEqual(determine_file_encoding(
-            b'#\0 \0c\0o\0d\0i\0n\0g\0:\0 \0u\0t\0f\0-\x001\x006\0-\0l\0e\0'),
-            ('utf-16-le', 0))
+        self.assertEqual(determine_file_encoding('# coding: utf-32-be'.encode('utf-32-be')), ('utf-32-be', 0))
+        self.assertEqual(determine_file_encoding('# coding: utf-16-le'.encode('utf-16-le')), ('utf-16-le', 0))
 
 
 if __name__ == '__main__':
diff --git a/yt_dlp/utils.py b/yt_dlp/utils.py
index 5d4e607aba..7648b6fcee 100644
--- a/yt_dlp/utils.py
+++ b/yt_dlp/utils.py
@@ -3485,6 +3485,7 @@ def age_restricted(content_limit, age_limit):
     return age_limit < content_limit
 
 
+# List of known byte-order-marks (BOM)
 BOMS = [
     (b'\xef\xbb\xbf', 'utf-8'),
     (b'\x00\x00\xfe\xff', 'utf-32-be'),
@@ -3492,7 +3493,6 @@ def age_restricted(content_limit, age_limit):
     (b'\xff\xfe', 'utf-16-le'),
     (b'\xfe\xff', 'utf-16-be'),
 ]
-""" List of known byte-order-marks (BOM) """
 
 
 def is_html(first_bytes):
@@ -5398,37 +5398,20 @@ def read_stdin(what):
 
 def determine_file_encoding(data):
     """
-    From the first 512 bytes of a given file,
-    it tries to detect the encoding to be used to read as text.
-
+    Detect the text encoding used
     @returns (encoding, bytes to skip)
     """
 
+    # BOM marks are given priority over declarations
     for bom, enc in BOMS:
-        # matching BOM beats any declaration
-        # BOMs are skipped to prevent any errors
         if data.startswith(bom):
             return enc, len(bom)
 
-    # strip off all null bytes to match even when UTF-16 or UTF-32 is used
-    # endians don't matter
+    # Strip off all null bytes to match even when UTF-16 or UTF-32 is used.
+    # We ignore the endianness to get a good enough match
     data = data.replace(b'\0', b'')
-
-    PREAMBLES = [
-        # "# -*- coding: utf-8 -*-"
-        # "# coding: utf-8"
-        rb'(?m)^#(?:\s+-\*-)?\s*coding\s*:\s*(?P<encoding>\S+)(?:\s+-\*-)?\s*$',
-        # "# vi: set fileencoding=utf-8"
-        rb'^#\s+vi\s*:\s+set\s+fileencoding=(?P<encoding>[^\s,]+)'
-    ]
-    for pb in PREAMBLES:
-        mobj = re.match(pb, data)
-        if not mobj:
-            continue
-        # preambles aren't skipped since they're just ignored when reading as config
-        return mobj.group('encoding').decode(), 0
-
-    return None, 0
+    mobj = re.match(rb'(?m)^#\s*coding\s*:\s*(\S+)\s*$', data)
+    return mobj.group(1).decode() if mobj else None, 0
 
 
 class Config: