Buying Your Next Vehicle: Understand The Bill of Sale

In Ontario we have the Motor Vehicle Dealers Act (MVDA) legislature and the Ontario Motor Vehicle Industry Council (OMVIC) to enforce it. OMVIC is important because it is this council that behaves as a “Better Business Bureau” for the Automotive industry when it comes to selling and advertising.

Some important things to know:

a) Dealers cannot sell a vehicle for more than the listed Manufacturer’s Suggested Retail Price (MSRP) – this can be found on all Manufacturer’s websites

b) The Selling price of the vehicle is the MSRP plus added Options off the base vehicle, plus Freight, plus Air Tax of $100. All four are found on Manufacturer’s websites.

c) After the Selling price on all contracts will be the Dealer Administration Fee, License Fee, Gas Fee, Tire Tax, Trade-In etc., this is part of the business and Dealers are highly unlikely to negotiate on these fees. It’s here that you’ll add in up to $2,000 on top of the Selling Price. Also, any extended warranties (I know they aren’t cheap usually start around $2,000, but they make good financial sense in the long run if you plan on keeping your vehicle longer than the manufacturer warranty) or other products that are sold in the business office. Each item must be called out on the bill of sale on it’s own line. These “miscellaneous” items plus HST gets us to the total to Finance.

d) The monthly payment is calculated off the total amount to finance and there will be a line under the total amount to finance that will show you how much interest on the loan that you are paying for the duration of the loan. Most finance contracts are open loans that mean you can pay them off early, saving on interest payments.

e) The Selling price (b) is important because the higher it is the more content you are getting in your vehicle so it’s good to know your model and know the price of the vehicle you actually are interested in buying.

Like any good business model, selling in-stock inventory is preferred where possible over factory ordering. Why? Because the longer a vehicle sits on a dealership lot the more money is being paid to the bank in interest for the line of credit. I am going to try to explain something without sounding sleazy and my apologies if I do.

One of my first customers who purchased a vehicle from me was mostly interested in colour and a few other options off of a mid-range model. I found a vehicle in inventory that suited them exactly, no extra features. I gave them payments and they agreed to the terms and there was very little negotiation on payment or price which is a bad thing for both the Seller and the Buyer. It’s bad for the Buyer because I am sure after a few days of taking possession of the vehicle they were thinking “I could have negotiated this price down.” And the Seller (I admit I did think this because I realized it was true but unethical) “I could have sold them a higher priced vehicle and made more money and they wouldn’t even have had a clue. They were more focused on colour and the monthly payment didn’t matter, an extra $2,000 on the Selling price with a better equipped model would have been $4/month more on their payment, they wouldn’t have noticed.”

So selling price is important, understand what you are buying; understand what content is in the vehicle that gets you to the price. Be comfortable and confident with what you are buying.

It’s not about negotiating the Selling price, it’s about understanding it and agreeing that you have made the right choice for you. It is not shrouded in secrecy; the Bill of Sale must show the model, option and MSRP as the Selling price along with all the added costs and fees. If there is something you disagree with, bring it up before signing the Bill of Sale.

As a consumer you can confirm the price and the model by going onto the Manufacturer website and double checking everything adds up. If something is off ask the Dealership to explain it and if they can’t explain the discrepancy use the tools available to you, contact OMVIC.

f) Once the Bill of sale is signed you are liable to meet the obligations of the contract unless otherwise stipulated on the bill of sale. Example of a stipulation: Subject to finance approval etc. Make sure you understand the Bill of sale before signing.

Buying a car should be a stress-free experience and as a customer you should feel informed on what you are buying and why. Understand that there are fees involved and that no matter how much you might not like the fees it is part of the business. One of the sales people I used to work with who I liked to call the “Al Pacino” impersonator (he should have really worn tweed and a bow tie) was never out to eat your dinner. Most of my coworkers were down to earth, hockey fans who had a hard time telling a lie and have severe Negotiaphobia (don’t tell them I said that! :))

Ok so this post has gone way off the rails from what I was intending – I became a little passionate about that “Bill of sale” and the “Selling price” but they are my two pet-peeves 🙂

If you are in the market for a car and have a question, ask away and I’ll do my best to answer.

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