Common Dealer Fees Everyone Should Know

As many veteran car buyers know, the retail price is not the same amount that ends up being listed at the bottom of a bill of sale. For instance, if the MSRP of the car you are about to purchase is $21,000, you may actually pay $22,000.

This happens due to additional (pre-tax) fees that dealers charge their customers. Some fees are mandatory, while others are optional – but that is not always made clear.

Research and vigilance play a key role in making sure that the consumer does not overpay. The following list provides some guidance in this respect.


Mandatory additional fees apply to all vehicles in every single province. These fees are usually unavoidable. Anything else that is added on top of these fees (aside from the HST) is optional.

a. Freight

Freight is essentially the price of shipping a vehicle from the location of production to wherever it will be sold. To determine the freight fee, a manufacturer has to calculate the average cost of transporting a particular make and model to a Canadian dealership and apply the amount to all of them – regardless of where in the country they are being sold. The reason for this is to make sure the freight charge for each make and model is the same nationwide.

Most dealers tend to combine freight and PDI into a single fee on a bill of sale.

b. PDI

PDI (or Pre-Delivery Inspection) is the price of doing a maintenance check of a vehicle when it first arrives at a dealership. Every dealer is obligated to check their cars to make sure they are ready for the road. Unlike the freight fee, this amount is determined by the dealer, not the manufacturer.

Most dealers tend to combine freight and PDI into a single fee on a bill of sale.

c. Air Tax

Air tax, or Federal Air Conditioner Excise Tax, is a $100 fee that the government of Canada applies to all vehicles with onboard air conditioning.

d. Tire Tax

Tire tax is a provincial fee applied to any vehicle purchased from a dealership to fund a nationwide tire recycling program. Though the charge varies from province to province, it usually falls between $20 and $30.

e. Regulatory Charges

Car dealers in Ontario and Alberta charge government-imposed regulatory fees administered by OMVIC (Ontario Motor Vehicle Industry Council) and AMVIC (Alberta Motor Vehicle Industry Council). The OMVIC fee is $5, while the AMVIC charge is $6.25.

f. Block Heater Installation

Dealers sometimes charge a fee for installing a block heater, the purpose of which is to keep a car’s engine warm in cold temperatures to ensure it starts. Installing block heaters is a requirement in parts of Canada with colder winters, where temperatures are continuously below 0°C, but not in any of the southern provinces, such as Ontario.


While mandatory fees are unavoidable, optional fees can be excluded completely, if they are not desired.

a. Admin Fee

Administration is a fee dealers charge to cover expenses such as licensing, arranging insurance documentation, processing a loan or lease with a financial institution as well as activation of satellite radio, Bluetooth and other similar in-car devices.

While this charge is usually negotiable on the sale of most cars, dealerships that sell luxury vehicles tend to make it mandatory.

b. VIN Etching

Etching is a fee dealers charge for the service of imprinting a vehicle’s VIN onto its windows. The purpose of this exercise is to reduce the vehicle’s value and in turn prevent thieves from stealing and reselling it. This service is NOT required for any vehicle in any of the provinces.

c. Nitrogen-Filled Tires

The cost of adding nitrogen to a vehicle’s tires. This service is required only if you are purchasing a sports car, because nitrogen improves drivability, safety and fuel efficiency when driving at high speeds.

d. Rust Protection

A fee for applying some form of rustproofing. While this service can be beneficial, it is NOT required.

f. Extended Warranty

An extension to the standard manufacturer warranty that dealers sometimes offer before a vehicle is purchased. It is possible to buy an extended warranty at any time, which means that car buyers are not obligated to do so right away.

If you have any additional questions, feel free to contact us at any time or access our free dealer cost report.