Definitions

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Administrative Fee

This is the fee car dealers charge to “administer” a purchase or lease of a vehicle. The amount can vary, but most dealers ask for this fee. Ask your dealer for the amount of the administration fee before you buy so that it can be included in your purchase/lease planning.

After Tax Items

After-tax items are fees a car dealer must pay when selling a vehicle. These items include provincial licensing and registration fees, as well as any fees related to a vehicle lien.

Buyback (residual value)

Buybacks are determined by the leaser, in most cases the manufacturer, and are usually expressed as a percentage of the manufacturer’s suggested retail price (MSRP). While different consumers may negotiate different selling prices for the same vehicle, their lease buybacks will remain the same as long as the length of the lease and the mileage allowance are the same. Always confirm the exact amount of the buyback with the dealer. In order to calculate the lease correctly you need to have the exact amount of the buyback.

Dealer-added Options and Services

Dealer added options and services include accessories for your vehicle (e.g., roof racks, bug deflectors) and special services (e.g., rust proofing, extended warranties).

Freight and Pre-delivery Inspection (PDI)

Freight is the charge for transporting a vehicle to the car dealership. Pre-delivery inspection is a charge for the dealer to do a mechanical check of the vehicle before a sale. These charges are included in the manufacturer’s suggested retail price (MSRP) of the vehicle.

Manufacturer’s Suggested Retail Price (MSRP)

The manufacturer’s suggested retail price, or “sticker price,” is the price set by the car’s manufacturer. It includes the base price, factory options, freight and pre-delivery inspection charges and the federal tax on vehicles with air conditioning.

Personal Property and Security Act (PPSA)

The Personal Property and Security Act lets provincial governments charge a small annual fee to register a loan or a lease. Some companies pass this fee on to the buyer as a one-time service charge. The fee is called Registre des droits personnels et réels mobiliers (RDPRM) in the province of Quebec.

Provincial Charges

Car dealers have to pay provincial charges when they sell a vehicle. For example, in Ontario, a car sale can include a fuel tax, a tire fee and a fee for the provincial regulator. Provincial charges are taxable and are non-negotiable.

Taxes

In most provinces, a provincial sales tax is added to the purchase price of a vehicle, or to the monthly payment for a lease. A trade-in reduces your taxable amount, but a down payment does not. In March 2020, the Government introduced a temporarily enhanced first-year capital cost allowance rate of 100 per cent for eligible zero-emission vehicles (ZEVs) to support business adoption. Learn more about how this write-off works on the Tips page under “iZEV Program”.
  1. Calculators
  2. |  Definitions
  3. Tips
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