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Hidden Fees To watch Out For When Buying a Car in Canada

Hidden Fees To watch Out For When Buying a Car in Canada

Few things can match the excitement and anticipation of shopping for a new vehicle. Your mind races with dreams of cruising down the highway in a shiny new ride, wind in your hair and favorite tunes blasting on the stereo. However, that exhilaration can quickly turn into frustration and disappointment if you’re not vigilant about the many hidden fees car dealers commonly tack on to the advertised price. Don’t let unexpected charges ruin your new car buying experience.

This guide will uncover the most common hidden fees to watch out for when purchasing a new or used vehicle in Canada. You’ll learn exactly what these secret costs are, what they cover, typical amounts charged, and most importantly, tips to avoid or reduce them. With the inside scoop provided here, you’ll walk into the dealership armed with knowledge to sniff out bogus fees and negotiate the best possible deal. Wave goodbye to nasty surprises on your bill of sale!

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What is an All-In Price?

All-in pricing laws in Canada are designed to provide complete transparency on the total cost when buying a new or used vehicle. The all-in price, sometimes called “one price” advertising, requires dealerships to disclose every fee and charge upfront so there are no surprises for car buyers later on.

Under these regulations, the advertised price for a vehicle must include all fees and charges payable by the customer to buy or lease that vehicle. This includes the vehicle price, freight and pre-delivery charges, administration fees, and any other costs the dealer intends to collect from the buyer.

The all-in pricing rules prohibit car dealerships from tacking on extra fees after an advertised price to increase revenue. Common fees that must be disclosed upfront include documentation fees, licensing costs, and dealer preparation charges. Basically, any mandatory fee beyond just the vehicle price itself must be bundled into the advertised, all-in price.

However, dealers are still permitted to charge for optional items separately, after disclosure of the all-in price. This includes fees for things like extended warranties, rust protection, and interior protection packages. But the dealer must provide an itemized list of these elective add-ons to the buyer ahead of purchase.


Documentation/Admin Fees

One of the most common hidden fees when buying a car in Canada is the documentation or administration fee charged by the dealership. This fee can range anywhere from $300 to as much as $800 depending on the dealership.

The documentation fee covers the administrative costs incurred by the dealer to prepare all the licensing and registration paperwork when you purchase a new or used vehicle. It may also include costs related to storing the vehicle, marketing, overhead and profit. However, the fee is not directly tied to any mandated government charges.

While documentation fees are standard across the industry, they are not regulated in most provinces. This gives dealerships leeway to charge higher amounts to boost profits. For buyers, it’s an extra cost added to the purchase price, on top of government levies and taxes.

If you want to avoid paying an exorbitant documentation fee, you have a couple options:


  • Negotiate a lower documentation fee with the sales manager. Dealerships may be willing to reduce the amount if you push back or threaten to walk away.
  • Shop around for dealerships that don’t charge documentation fees at all. While less common, some dealers advertise no-fee buying to attract customers.
  • If purchasing a used vehicle from a private seller, you can avoid the fee altogether.


The key is to be aware that documentation and administration fees are simply added dealer costs. With some negotiation and research, you may be able to minimize or eliminate them when buying your next car.


Freight Delivery Fees

Freight delivery fees are charges set by the manufacturer to cover the cost of transporting the vehicle from the factory to the dealership lot. This is a standard fee on all new cars, typically ranging from $1,500 to $2,000 depending on the make and model.

Since freight fees are non-negotiable and the same at every dealership, many buyers consider them a “hidden fee.” However, unlike doc fees and add-ons, freight charges are legitimate and unavoidable on a new car purchase.

While you can’t get out of paying freight fees completely, you do have a few options to reduce them:


  • Ask the dealer if they offer discounts or rebates that can be applied to the freight charge.
  • Negotiate to have a portion of the freight fees waived if you’re also purchasing add-ons or an extended warranty.
  • Consider buying a vehicle that’s already in the dealer’s inventory rather than custom ordering, since the freight was already paid by the original buyer.


The bottom line is that freight delivery is a standard charge on new vehicles. But savvy buyers can often negotiate to have a portion of these fees reduced or waived by the dealer as part of the overall deal.


Extended Warranties

Extended warranties, also known as vehicle service contracts, provide coverage beyond the factory warranty included by the manufacturer. An extended warranty can give you peace of mind by covering certain repairs and components after the factory warranty expires. However, they usually come with a high price tag, ranging from $1,000 to $3,000 on average.

Many experts advise skipping the extended warranty if you’re buying a new car. New vehicles typically come with generous factory coverage for 3 years or 60,000 km. On a used car, an extended warranty can be a smart purchase if the factory warranty is close to expiring. Still, it’s important to weigh the costs versus potential benefits.

Before agreeing to an extended warranty, read the contract carefully and make sure you understand what’s covered and what’s excluded. Bundles and exclusionary plans with pages of fine print can be difficult to comprehend. Ask the finance manager to explain the contract in simple terms. Also, be sure to shop around and compare extended warranty pricing between insurers like the manufacturer, dealer and third-parties. There’s often room to negotiate down the cost.


Other Hidden Fees

In addition to the main fees discussed already, there are a number of other hidden costs dealers may try to tack on when buying a car in Canada:


Licensing Fees

The licensing fee covers the cost of transferring the vehicle registration and license plates into your name. This ranges from $20-$60 depending on the province.


Tire Levy

Some provinces charge a tire recycling fee of $5-$30 to cover the cost of sustainably disposing and recycling used tires.


Air Conditioning Tax

If your vehicle has air conditioning, you may be charged an extra air conditioning tax of around $100. This originated when AC was considered a luxury add-on.


New Vehicle Registration Fees

Registering and plating a new vehicle can cost $180-$300 on top of regular registration renewal fees. Some dealers include this cost in documentation fees.

While not all provinces charge every fee, it’s important to watch out for these less common costs during the purchasing process. They can quickly add a few hundred extra dollars to your bill.


How to Avoid Hidden Fees

When buying a car in Canada, it’s important to be proactive in avoiding hidden fees that can quickly drive up the total cost. Here are some tips:


Negotiate the All-In Price

Focus your negotiations on getting the lowest all-in or out-the-door price, rather than just the vehicle price. This includes all taxes, levies, documentation fees and any other charges. Make it clear you won’t pay any additional fees beyond the negotiated total.


Shop Around

Don’t just look at one dealership. Compare quotes from several dealers in your area to leverage them against each other. This competition forces dealers to minimize any unnecessary fees to earn your business.


Be Willing to Walk Away

If a dealer won’t drop hidden fees or refuses full transparency, be ready to walk away. There are plenty of dealers who will provide a fair, all-in price without surprise costs.


Know Your Rights

Understand the laws around all-in pricing and what fees dealers can and cannot charge. This knowledge gives you power to call out and refuse illegitimate fees.


Questions to Ask the Dealer

When negotiating the price of a vehicle, make sure to ask the dealer pointed questions to uncover any hidden fees:


– What fees are you charging beyond the advertised price?

– Can you provide a full breakdown of all added fees and charges?

– Are there any fees you can waive or reduce?

– What is the documentation fee and what does it cover?

– Is the freight delivery fee negotiable?

– What is the out-the-door price after all taxes and fees?

– Are there any extras like an extended warranty or service package added on?

– Can you provide the total price in writing before I sign any paperwork?


Asking direct questions and insisting on transparency forces the dealer to disclose all costs upfront. Make sure you understand every fee and negotiation room before committing to a final price.


Red Flags to Watch For

When shopping for a vehicle, there are some concerning behaviors from salespeople that should raise red flags. Watch out for the following tactics, as they may be signs a dealership is trying to charge you unnecessary fees:


Vague responses on fees – If a salesperson seems evasive or unclear about documenting fees, it could be a sign they plan on tacking on charges after you’ve committed to buying. Insist on specifics on every fee.


High pressure tactics – Dealers may try to rush you through paperwork so you don’t scrutinize the fees. Take your time and don’t let them pressure you into signing anything until you fully understand the costs.


Refusing to negotiate – Reputable dealers will be willing to negotiate down fees you feel are unreasonable. Walk away if they insist fees can’t be reduced or removed.


Unwillingness to provide detailed breakdown – You have a right to know exactly what you are being charged for. If a dealer seems reluctant to provide an itemized fee breakdown, it could be a warning sign of hidden costs.


When Fees May Be Legitimate

While hidden fees are often used unethically by dealerships, there are some cases where extra charges beyond the advertised price may be valid. However, for any fees to be considered legitimate, the dealer must provide proper documentation and reasoning behind each cost.

Fees that can potentially be justified include:


  • Documentation fees to cover administrative costs like preparing paperwork and licensing – However, these should be in line with reasonable, competitive rates in your region.
  • Destination or transportation fees to cover the cost of shipping the vehicle to the dealership – But the amount should accurately reflect the freight cost.
  • Taxes and government levies like air conditioning taxes – These are legally required to be collected in some regions.


The key is that the dealership must be able to show detailed paperwork that explains what each fee covers and why it is being charged. You should also compare the amounts to typical rates in your area to ensure you are not being overcharged.

A dealership that cannot provide proper documentation and reasoning for every fee should remove the charges. Hidden fees without explanation are unethical and likely illegal.


Reporting Deceptive Practices

If you feel a dealership has been deceptive with hidden fees or false advertising, there are a few ways to report the issue:


Contact dealership management – Speak to a sales manager or general manager at the dealership first. Explain the situation calmly and what you would like them to do to resolve it.


File complaint with OMVIC/AMVIC – These are the vehicle sales regulators in Ontario and Alberta. They investigate consumer complaints against registered dealers.


Leave online reviews – Post a factual review of your experience on platforms like Google, Facebook, DealerRater. This creates public awareness of issues.


Report to Competition Bureau – If you believe the dealership has violated federal competition laws around false or misleading advertising, you can file a complaint with the Competition Bureau.


Reporting deceptive practices can help hold dealers accountable and prevent other consumers from being misled. Make sure to document everything that happened for the best chance at a resolution.


Know the Total Cost Upfront

One of the best ways to avoid hidden fees when buying a car is to know the total cost upfront. Don’t rely on any verbal promises – get a full, itemized breakdown of all charges in writing from the dealership before negotiating further. This written quote should include:


  • The sale price of the vehicle
  • Documentation fee
  • Taxes
  • Registration and licensing fees
  • Any add-ons like extended warranty


With quotes in hand, take the time to compare line by line. Look out for differences in fees and be wary of dealers trying to slip in additional profit centers. You can use the lowest quote as leverage in negotiating with other dealers.

It’s also wise to secure your own financing before visiting the dealer if possible. That way you walk in with a pre-approved rate and term, eliminating one more potential fee. Come armed with confidence, knowing the total dollars you are willing to pay out the door.


Be Ready to Negotiate

When purchasing a vehicle, you need to be prepared to negotiate in order to get the best deal. Set a target budget for yourself based on research of the vehicle’s value and your financial situation. This budget should be the maximum you’re willing to pay out the door, including all taxes and fees.

Don’t be afraid to walk away if the dealer won’t meet your target price. Be polite but firm that you will only sign the paperwork if the negotiated price meets your budget. If the salesperson says they can’t go any lower, get up and head for the exit. Many times they will stop you and make a better offer before you leave.

Get all promises and negotiated terms in writing before signing anything. Verbal agreements mean nothing once you drive off the lot. Make sure the final purchase price reflects any special deals you negotiated and review the full contract carefully before signing.


Insist on Transparency

One of the best ways to avoid hidden fees when buying a car is to insist on full transparency from the dealership. Don’t be afraid to ask lots of questions and demand detailed explanations on every charge on your invoice.

Specifically, you’ll want to ask about:


  • The documentation fee – What does this cover exactly?
  • Delivery and freight fees – Are these set by the manufacturer or negotiable?
  • Extended warranties – What’s included and what’s the total cost?
  • Dealer preparation fees – What does this include?


Don’t let the dealer brush off your questions. Press them for clear answers on what each fee is for and whether it’s mandatory or can be reduced or removed.

You should also reference your rights under all-in pricing laws, which require the total advertised price to include all fees except taxes. If you feel a dealer is tacking on unreasonable fees above the advertised price, call them out on it.

Finally, always demand to see a fully itemized invoice before signing anything. This will allow you to review each charge line by line. Don’t be pressured into signing unless you’re 100% clear on what you’re paying for.

Being assertive about transparency and your right to reasonable fees will go a long way in avoiding extra charges. A reputable dealer should have no problem providing detailed explanations and breakdowns.



Buying a car is a major purchase that involves many fees beyond just the sticker price. This guide has outlined the most common hidden costs to watch for when purchasing a new or used vehicle in Canada.

The key takeaways are:


  • Be aware of admin fees, freight charges, extended warranties, and other extras that dealers may try to tack on.
  • Educate yourself on your rights around all-in pricing laws which require full transparency on the total price.
  • Ask questions, watch for red flags, and don’t be afraid to walk away from a deal that seems deceptive.
  • Negotiate the final out-the-door price and insist all fees are clearly disclosed upfront before signing.


By staying vigilant, knowing your rights, and being ready to negotiate, you can avoid hidden costs and feel confident you received the best possible deal.

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Questions About Hidden Fees When Buying a Car in Canada

Hidden fees when buying a car in Canada can include administration fees, freight charges, documentation fees, and more. Dealers may charge fees ranging from $300 – $800 for preparing final paperwork and vehicle licensing. These extra costs are added on top of the listed price to increase dealer profit. Be prepared to negotiate or walk away if fees seem excessive.

In most provinces, car dealers must now advertise vehicles with an all-in price, including all fees and levies except taxes. This means common fees for documentation, administration, freight, PDI inspections, and more must be included in the advertised price by law. Extra fees cannot legally be added after agreeing on a price.

No, dealerships can legally charge above a vehicle’s Manufacturer’s Suggested Retail Price (MSRP) in Canada. However, the extra markup or “market adjustment fee” added by the dealer must be included in the advertised pricing upfront. There is no law against charging over MSRP as long as all costs are transparent to the buyer beforehand.

Typical fees found when buying a used car in Canada include:


– Safety and emissions testing fees

– Documentation/admin fees ($300 – $500)

– Licensing and registration costs

– Provincial tire tax and air conditioning levy

– Freight and PDI (pre-delivery inspection)

– Extended warranty costs (if purchased)


These fees can add hundreds or thousands to the purchase price.

Important questions to ask about fees when buying a car include:


– What fees are already included in the advertised price?

– Are there any required fees you will charge for licensing or documentation?

– Is there wiggle room to negotiate the documentation or admin fees?

– What is your best out-the-door price including all necessary fees?

Some dealership fees worth avoiding if possible include:


– Extended warranties (consider 3rd party options)

– VIN etching/theft protection packages

– Fabric/paint protection packages

– Nitrogen-filled tires (not necessary)

– Compliance fees (no value to consumer)

Licensing fees when registering a used car in Canada vary by province but often include:


– Registration fee (~$60 in ON, ~$90 in BC)

– License plate sticker fee

– Applicable sales tax on vehicle purchase price

– Tire recycling fees

– Air conditioning excise tax


Overall licensing fees often total $150 – $300 depending on the province and vehicle value.

Tips to avoid hidden fees:


– Research all fees required in your province beforehand

– Ask for an all-in out-the-door price in writing

– Read all paperwork carefully before signing

– Be ready to walk out if new fees appear

– Consider shopping around between multiple dealers

– Ask questions and understand what each fee is for

If a dealership charges fees after agreeing to a specific out-the-door price, calmly bring up that the terms have changed. Politely assert that you agreed to a lower price and see if they will honor it. If not, reconsider the purchase and leave. You can also file complaints with organizations like the Better Business Bureau (BBB) to help address deceptive practices.

Freight and Pre-Delivery Inspection (PDI) fees charged by automakers in Canada generally range between $1,500 – $2,200. This covers transportation of the vehicle to the dealer as well as inspection and preparation before buyer pickup. These standard OEM charges should be included in a dealer’s advertised pricing.

Key questions about dealer fees:


– What does your documentation fee cover? Is it negotiable?

– Can you provide an all-in price quote in writing including all charges?

– If I qualify for rebates, do they apply before or after dealer fees?

– What add-ons or products are optional for me to purchase?

– What is your best price if I decline all optional dealer add-ons?

Some questionable fees to look out for:


– Etching/theft protection packages

– Nitrogen fills for tires

– Fabric and paint protection packages

– Compliance fees

– Market adjustment or added markup over MSRP

– Dealer documentation fees over $500


Scrutinize these fees carefully as they may provide little value while padding the dealer’s profit.

By law, only taxes cannot be included in all-in vehicle pricing in most Canadian provinces. This means required fees for licensing, documentation, administration, freight, PDI inspections and more must all be in the advertised price shown to consumers. Only GST, PST or HST taxes can be added at time of purchase.

When buying a used car, licensing and registration costs often total $150 – $400 depending on the vehicle’s value and province. Fees include:


– Registration (~$60 ON, ~$90 BC)

– License plates

– Sales tax on vehicle price

– Tire and air conditioning levies

– Inspections


If a dealer tries to charge excessive documentation fees over $500 and won’t budge, politely stand firm on paying a reasonable amount or walking away. Explain you have been quoted lower doc fees from other dealers in the area. If they won’t compromise, it may be best to shop elsewhere.

To research average dealership fees in your province or city:


– Search dealer forums for customer fee reports

– Check provincial automotive associations

– Search dealership websites for fine print on fees

– Ask friends who purchased recently what they paid

– Contact multiple local dealers for itemized quotes

If you face misleading fees or pricing tactics from a dealership, contact these consumer protection agencies:


– Provincial Motor Vehicle Sales Authority

– The Better Business Bureau (BBB)

– The Canadian Motor Vehicle Arbitration Plan (CAMVAP)

– Provincial Consumer Affairs office

– The federal Competition Bureau

If a dealership refuses to be up front and disclose all charges, it’s best to walk away. A dealer who hides fees or declines full transparency even when asked directly should not be trusted. Politely state you’ll only purchase if all fees are disclosed then go elsewhere if needed.

Each province has a motor vehicle sales regulator that oversees dealer conduct – like OMVIC in Ontario and AMVIC in Alberta. These regulators enforce consumer protection laws related to advertising, sales practices, and complaint handling. The federal Competition Bureau also polices anti-competitive business practices.

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