A car buyer's order, line by line: what each charge means

A buyer's order (also called a bill of sale, purchase agreement, deal sheet or offer sheet) is the dealer's itemized summary of what you are agreeing to pay. Read it before you sign the finance contract, because the finance numbers are built from it. A wrong line here usually carries through to everything after it.

A sample buyer's order

Sample buyer's order · Northgate Motors (synthetic, for illustration only)

• Vehicle price: $31,480

• Appearance protection package: $1,295

• VIN etching: $299

• Documentation fee: $699

• Trade-in allowance: -$9,000

• Sales tax (sample rate): $1,486

• Title and registration: $420

• Service contract, 60 months: $2,850

• GAP: $795

• Payoff on trade-in loan: $4,200

• Cash down: -$3,000

• Amount financed: $31,524

The numbers are invented. Tax rates, government fees and what is taxable differ by state, province and territory.

Line by line: what it means and what to ask

Vehicle price

The price of the car itself, before fees, taxes and extras. Check it against the price you agreed to in writing.

• Does this match the price in the quote or email you received?

• Does it include any dealer-installed items, or are those listed separately?

• Is a freight, destination or delivery charge already included, or added on another line?

Add-ons and packages (appearance protection, VIN etching)

Lines like "appearance protection" and "VIN etching" are products the dealer sells on top of the car. The US Federal Trade Commission (FTC) says it's OK to say no to add-ons and to ask the price, and lists window etching among common examples. In the sample, these two lines add $1,594 before tax. For where else add-ons hide, see how to spot dealer add-ons in the contract.

• Is this item optional? What is the price of the car without it?

• If it is already installed, can it be removed from the price?

• What exactly does it cover, and for how long? Ask to see the written terms.

Documentation fee

A fee the dealer charges for preparing and processing paperwork. Rules on these fees differ by state, province and territory, so do not assume any amount is standard. Ask whether it is a dealer fee or a government fee; the two are often confused.

• Is this fee charged by the dealer or by a government office?

• Was it included in the advertised price? (The FTC says a fee a dealer requires to buy the car must be included in the advertised price.)

Trade-in allowance and payoff

The trade-in allowance is what the dealer is paying for your current car. If you still owe money on it, the payoff line shows the loan balance the dealer will clear. In the sample, the trade is worth $9,000 but $4,200 is still owed, so the real benefit to you is $4,800. If you owe more than the car is worth, the difference (often called negative equity) is usually added to the new loan.

• Is the allowance the figure we agreed on?

• Is the payoff amount current, and how was it confirmed with my lender?

• Is any negative equity being added to this deal?

Sales tax

How tax is calculated, and whether a trade-in reduces the taxable amount, depends on where you live. In Ontario, for example, the vehicle regulator OMVIC says buyers should expect to pay HST and licensing on top of the advertised all-in price. Ask the dealer to show the calculation, not just a single total.

• What rate was used, and on which amount?

• Which lines were taxed (fees, add-ons, the trade-in)?

Title, registration or licensing

Usually government charges for transferring ownership and registering the car. Some dealers add their own processing charge next to them, so ask for the two as separate figures. Your motor vehicle office or transport authority publishes the official fees.

Service contract and GAP

A service contract (often sold as an "extended warranty") pays for certain repairs after the purchase. The FTC describes these as optional contracts and notes that they may duplicate the manufacturer's warranty. GAP covers some or all of the difference between what you owe and what insurance pays if the car is totaled or stolen. The CFPB says add-ons like these are generally optional and that terms vary.

• Is this optional, and what is the total if I remove it?

• Who is the provider, what is covered, and is there a deductible?

• Can it be canceled later, and how is any refund calculated?

Cash down and amount financed

The amount financed is what you borrow: in the sample, everything above minus the trade-in allowance and cash down. Every add-on left on the order is borrowed too, so you also pay interest on it. The same figure should appear again on the finance contract or credit disclosure.

• Does the amount financed on the finance contract match this order?

• What are the APR, the number of payments and the total of payments?

A quick check before you sign

1. Add up the lines yourself. The arithmetic should match the totals.

2. Circle every line you did not ask for and ask about each one.

3. Compare the vehicle price and trade-in allowance with what you were quoted in writing.

4. Check that the amount financed on the finance contract matches the buyer's order.

5. For a used car in the US, check the FTC Buyers Guide on the window. The FTC says it overrides anything in your sales contract.

6. Ask for a printed copy of the contract and keep a signed copy of everything you sign. The FTC notes that electronic signing screens may not show every term.

If the dealer won't explain a line or remove an add-on you don't want, you can take the paperwork home and decide later. If you think a dealer added charges you did not agree to, US buyers can report it at ReportFraud.ftc.gov; in Canada, the FCAC points to your provincial or territorial consumer affairs office for complaints about dealers.

Comparing two orders

If you have offers from two dealers, compare them line by line, not by monthly payment. Match the vehicle price first, then fees, then add-ons, then the trade-in. To reduce each offer to one comparable figure, see how to work out the out-the-door price.

Get a second look at your buyer's order

EasyToDecode is launching soon. It will read your own buyer's order and finance contract, quote the lines that matter, flag charges that need explaining or figures that don't match, and prepare questions to send the dealer before you sign. See how it works or join the waitlist to hear when it opens.