Dealer invoice, financing options & future value:
A Spreadsheet (below) to Calculate your Payments
This page is designed to guide you through the financial lifecycle of car ownership. Divided into four distinct parts, you will be able to:
- Determine all of the details of the dealer invoice and work out a final bottom line for any particular deal. Why not call the dealer in advance and glean all of these details before showing up for a test drive? If you know what to expect in advance, you'll have a better chance of negotiating the deal you want.
- Based upon the foregoing, determine your car payments and total cost of borrowing. Budget at home with this document, or work the numbers live with your smart phone right on the dealer's lot.
- "Guesstimate" your equity at the time of purchase.
- "Guesstimate" your equity at any point in the future. This can be helpful if you're trying to figure out what your current car is worth; just fill in the original details of its purchase into this spreadsheet.
With the below spreadsheet, you can plan your financial commitment before you go to the dealer, and save yourself from unexpected surprises. Change numbers to do a what if analysis just as you would with any spreadsheet.
The below spreadsheet is set up to follow the Ontario jurisdicton rules but can still be used in any other scenario by adding line items as required, or using $0.00 values for things that do not apply.
One important distinction must be made in Ontario. The "advertised price" must be an "all in price". The seller must disclose anything the advertised price excludes within the advertisement, usually taxes and licensing.
JavaScript Required
JavaScript is used for all calculations, so this spreadsheet will only work if JavaScript is enabled in your browser. It would be unusual to have JavaScript disabled in your browser.
Legend
The "Dealer Invoice" section shows common line items found on any dealer invoice and is based upon an actual invoice. Use the "+" buttons to add line items as necessary. All values in blue border boxes can be modified. And just to make it real, I've included lots of fine print.
Pressing the "Enter" key, or the "recalculate all" button will cause the spreadsheet to fully update with the latest input. Values formatted with a pink background are considered invalid and ignored.
Each section has footnotes to explain details of the line items.
Dealer Invoice
| Read the fine print: | |
| (A) | For sake of argument, I've seeded the document with a $10,000 car. It's a nice even number to start off with to demonstrate how the price inflates as you move down the invoice. Good luck finding a decent $10,000 car these days. |
| (B)-2 | New cars equipped with Air Conditioning have a Canadian Excise Tax applied, used cars are exempt. |
| (E)-2 | OMVIC fees are mandatory for all retail car purchases and are levied by Ontario's Vehicle Sales Regulator. |
| (I) | The taxable portion is the difference in value between what you buy and what you trade. |
| (J) | Even if you don't buy retail, Ontario Sales Tax will still be applied based upon the fair market value of the purchased vehicle and will have to be paid when you go to licence it. |
| (K)-1 | Ontario licence renewal fees have gone away, but not the initial registration. And don't forget that renewing your Ontario licence plate is still required, even though there are no renewal fees or stickers. |
| (K)-2 | Dealers generally deliver the vehicle with a full tank of gas, but it may not be included in the price of the vehicle. |
| (K)-3 | Loan application fees are not necessarily free. |
| (G) | This is the usual advertised "all in" price. |
| (L) | This is the what you pay "all in" price. |
Financing Options
| Read the fine print: | |
| (M)-2 | Down Payment: watch what happens to your payments and your cost of borrowing when you increase this number just a little bit. |
| (M)-4 | I've set an arbitrary interest rate just for arguments sake. Put in a value that is consistent with current market conditions and your credit rating. The following link will yield a Google search for car loan interest rates in Ontario. |
| Financing rates can be all over the place, from 0% to Prime +/- alot. Manufacturers often use low interest rates as part of an incentive program. You can quickly see the value of that incentive when you compare your total cost of borrowing (N)-2 against your next best financing option. | |
| (M)-5 | Financing options can include lengthy terms; this decreases your car payment, but increases your total cost of borrowing. It's also not unexpected to have higher interest rates associated with longer terms. |
| (N)-1 | Period Payments: the math isn't that hard. Here's a Google search link for periodic loan repayments, if you'd like to compare what I'm presenting with another site. |
Estimated Post Purchase Value & Equity
| Read the fine print: | |
| (0) | Your newly purchased vehicle probably isn't worth this much. At best, it's usually only worth what the dealer paid for it. |
| (P)-1 | If you purchased extra equipment for your vehicle, it may or may not be valuable in a resale scenario. |
| (Q) | Your car depreciated as soon as you bought it - why would anybody pay the new retail price for your car, when it's been branded used? Used cars are not the same commodity as new cars, see note (0) above. |
| (R) | This is an estimated value based upon your inputs for depreciation and premiums. Most used vehicles are not worth as much as the current owner thinks it is. |
Estimated Future Value & Equity
| Read the fine print: | |
| (U) | Starting where we left off, above, line (R). |
| (V) | Choose any amount of time in years. The number of payments made in that period of time will be calculated and rounded down based upon the loan period (M)-6, and displayed at line (Y)-1. |
| (W) | For openers, we're arbitrarily using 10% annual straight line depreciation. If you think your Maserati depreciates differently, go ahead and change the rate. I remember my boss in banking explaining to me: "the one thing we know about cash flow projections, is that they're wrong". So it is with this, but we can still use this to try to guess where things will land over time. |
| (Y)-2 | Again, the same kind of math as used in calculating Periodic Payments (N)-1. |
| (Z) | Your equity is what your car is worth less what you owe against it at that time. |