Car Fees: Which Are Mandatory and Which Are Optional?

At the dealership, you may be thinking, what are all these fees, and do I have to pay for them? Not all fees are mandatory, so it's important you decide what is important and necessary for your specific situation. Here’s Mae’s breakdown of the fees you may be paying.

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Mandatory Fees

1. Shipping/ Freight: Typically, shipping and freight cost roughly $2,000.
2. A/C Tax: This $100 fee is what the government of Canada applies to all vehicles with air conditioning. 
3. PDI (Pre-Delivery Inspection): The dealership will verify the vehicle's maintenance when it arrives for a final quality check to make sure each vehicle is road- ready. The price of PDI varies, as it determined by the dealer. Sometimes this fee is lumped with the shipping/freight fee. 
4. Tire tax: A provincial fee applied to any vehicle purchased at a dealership to fund the Canadian tire recycling program. This charge varies from $20-$30, depending on the province.
5. Provincial Auto Regulatory Fees: Car dealers in charge government-imposed regulatory fees, such as the OMVIC (Ontario Motor Vehicle Industry Council) and AMVIC (Alberta Motor Vehicle Industry Council). For example, the OMVIC fee is $10, while the AMVIC charge is $6.25.
6. DOC Fee: An administration fee (generally $500-700, could be higher for luxury brands). If you're seeing $1000 or more, ask the salesperson to disclose what they're including in the cost).

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Optional Fees

1. Extended Warranty: If you don’t have the means to pay for future repairs, an extended warranty can provide an alternative to an automotive emergency fund.
2. Rust Protection
3. Nitrogen-filled tires: Filling tires up with nitrogen provides a more predictable pressure fluctuation, prevents oxidation, and improves safety and fuel economy. Some dealers charge a fee for filling, usually exotic or sports cars, but some may charge it for different types of vehicles.
4. GAP Insurance: Guaranteed Auto Protection insurance reimburses you after an accident, when the total loss is less than the outstanding loan or lease.
5. Undercoating: A new vehicle may be subject to spot welds, bends, or folds. Undercoating can be effective in stopping existing rust from spreading, by penetrating through the base metal and stopping any further oxidization. 
6. VIN etching: Etching is a service that dealers provide to imprint a vehicle's VIN on its windows, and it costs money. This exercise's goal is to lower the value of the car, which will deter burglars from stealing and selling it. In any province, this service is NOT necessary for any vehicle.

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Before purchasing your vehicle, consider which services are important for your particular lifestyle. For negotiation tips with these fees and more, read up on our Negotiation 101 guide!