2 weeks Ago By Stephanie Wallcraft
Article content Once you’ve negotiated on and agreed to the price of a car with a dealership, you’ll be presented with an invoice. This document shows the agreed-upon price, a list of all the options and accessories and their costs, plus the additional fees you’ll be charged. The invoice can be overwhelming, but it’s important to look through it carefully.
Sometimes, this may turn up unexpected charges or hidden fees you may not be required to pay. In British Columbia, Alberta, Manitoba, Ontario, and Quebec, all-in pricing is the law. This means dealers must advertise a car’s price with all fees included apart from sales taxes and, in some cases, registration fees.
In other jurisdictions, the advertised price may not include these fees, and they can come as quite the shock. Regardless of whether you’re looking at all-in pricing, fees are sometimes included on an invoice that are negotiable or optional. Knowing what to look for can save you some money.
Here’s a rundown of the fees you’ll commonly see when buying a car from a dealership in Canada . Note that many of these fees apply to both new and used vehicles, which we’ve indicated in each section below. Go back to Section 10: Negotiating the price of a used car Fees a dealership will add to a car purchase Typically, the largest fee you’ll see when you buy a new car from a dealership is the freight and PDI .
This may also be referred to as the destination charge or delivery fee. It applies only to new vehicles, not to used vehicles. The freight charge is the cost of getting the car from wherever it’s assembled to the dealership.
PDI stands for pre-delivery inspection , which is the labour cost of the mechanics and detailers who inspect the car after it arrives and get it ready for you to pick up. Essentially, this fee is how the dealership passes these shipping and preparation costs on to you. This fee is considered mandatory, and dealerships aren’t usually willing to negotiate on it.
Dealers will often charge an administration fee or documentation fee on new and used vehicles. This covers the cost of the time it takes for staff to prepare your paperwork. It often lands in the $500 to $800 range, though it can be less or sometimes quite a bit more.
This fee is usually negotiable, and lowering or removing it is often one of the first discounts a dealership will offer when trying to firm up a deal. Federal fees and taxes on car purchases Any new vehicle that’s equipped with air conditioning is subject to a mandatory $100 federal tax. The only way to avoid this fee is to buy a car that doesn’t have A/C.
If the final price of your new car is more than $100,000, you’ll be charged the Canadian federal government’s luxury tax . This is calculated as either 10% of full taxable amount or 20% of the taxable amount above $100,000, whichever is less. No luxury tax is charged on used vehicles, even if they’re priced above the $100,000 threshold.
Provincial fees on car purchases When you buy a new or used car from a dealership, the staff will typically take care of the registration and licensing paperwork for you. This lets you legally drive away from the dealership without making an extra trip to the licensing authority. The fee is mandatory and varies between provinces and territories, but it’s usually close to what you’d pay to do it yourself and is worthwhile for the convenience.
The tire tax or tire levy is a fee applied at the provincial or territorial level to any vehicle purchased at a dealership that comes with a new set of tires. The funds collected from this tax go toward the national tire recycling program. The fee ranges from $20 to $30 and may apply to new or used vehicles, but you only need to pay it if the tires you’re receiving are new.
Ontario, Alberta, and British Columbia are the three jurisdictions in Canada that have dedicated motor vehicle sales regulators. In Ontario, this organization is called OMVIC (Ontario Motor Vehicle Industry Council), in Alberta it’s called AMVIC (Alberta Motor Vehicle Industry Council), and in B.C.
it’s called the VSABC (Vehicle Sales Authority of British Columbia). The regulatory bodies in these provinces oversee dealership operations to ensure transparency and consumer protection. When dealers collect a small fee, it goes toward operating these organizations.
In Ontario, the OMVIC fee is $12.50, while Alberta’s AMVIC fee is $10. Car buyers in B.
C. are not directly charged a VSABC fee. These fees are negotiable when you buy a car from a dealership The fees listed below may appear on your invoice when you purchase a car from a dealership.
None of these are mandatory, and you have the option of removing any or all of them from the agreement if you wish. The rust protection products offered by car dealerships vary widely and are often questionable in their efficacy. If you’d like to have rustproofing done, it’s a better idea to decline this at the dealership and take the car to a third party.
Krown Rust Control underbody oil spray has a good reputation for effectiveness when applied as recommended. Tires inflated with nitrogen maintain their pressure for longer than those filled with air, particularly under demanding scenarios such as high speeds. However, most drivers won’t notice an appreciable difference, and this benefit goes away as soon as you need to inflate the tire yourself.
Unless you’re buying a sports car and plan to take it to an autocross, feel free to skip this service. Your dealer will offer to etch the vehicle identification number (VIN) onto the glass for you. This is an effective theft deterrent, but it’s one you can apply yourself using an affordable DIY kit if this is important to you.
If you live in an area of Canada that regularly sees frigid winter mornings, having a block heater installed makes sense. But if you live in a milder part of Canada such as Vancouver or Southern Ontario and don’t need a block heater to ensure your car will start on the coldest mornings, you can skip this feature and the charge that comes with it. If you’ve ponied up for some fancy and expensive wheels, you may wish to pay for wheel locks to make it harder for thieves to make off with them.
But if there’s nothing special about your wheels, you can choose to skip this cost. (And then you also don’t have to worry about losing the wheel lock key.) A dealer can apply paint protection film or stain guard on your upholstery, but it often costs less to have a third party do this for you or to take care of it yourself.
Paying up front for future issues with your tires may seem like a good idea, but be sure to read the fine print. These plans often don’t cover situations like pothole damage or nail punctures, which are exactly the scenarios you’d need this type of coverage for. It’s usually better to save your money.
In some cases, an extended warranty can be a good idea, especially if your financing term is significantly longer than your car’s standard warranty. However, an extended warranty is never mandatory. If you won’t be out of warranty coverage for long while paying off the vehicle, or if you can shoulder the cost of out-of-warranty expenses, you can decline this add-on.
Prepaying for scheduled maintenance may seem like a good idea, especially if you’re offered a compelling price. But keep in mind that most maintenance plans lock you into the dealership where you purchase them. If you might need to move at some point or you’d otherwise benefit from having more flexibility, skipping this is a better plan.
In GAP insurance , GAP stands for Guaranteed Asset Protection. This type of insurance covers the difference between your vehicle’s actual value and the amount still owing on your car loan in the event it’s written off in a crash, natural disaster, or otherwise. This might be a good idea depending on how much of a financial burden this scenario would create for you, but know it’s always entirely optional.
Loan protection insurance will pay off the remaining balance of your car loan for you if you can’t make payments due to situations such as injury, illness, job loss, or death. This may be worthwhile, but be sure to read the fine print carefully to understand which scenarios will or won’t be covered. Regardless, it’s your decision: this is not a mandatory fee, and the dealership should remove it at your request.
Dealers can’t add fees once the deal is done Once you and the dealership have agreed on the pricing and fees for your new car and all parties have signed the bill of sale, it’s a done deal. From that point on, the agreement is binding. A dealership cannot surprise you with any fees once the transaction is under contract.
If your dealership is attempting to force you to pay a fee that isn’t mandatory or add fees you haven’t agreed to, contact your local motor vehicle sales regulator or consumer affairs office for help . Continue to Section 12: What sales taxes do I need to pay when buying a car? Sign up for our newsletter Blind-Spot Monitor and follow our social channels on X , Tiktok and LinkedIn to stay up to date on the latest automotive news, reviews, car culture, and vehicle shopping advice..
