Car MSRP: How It Relates to The Price?

It may sound redundant, but the fact that there are three different ways of acquiring a vehicle, makes "the price" of a car change concerning the Manufacturer Suggested Retail Price or MSRP. On the following article, I will explain the differences and why it changes depending on the case.

Cars Have an MSRP as Any Other Retail Product

The MSRP is a very common term in the retail industry, but not just in the automotive one. Any kind of product has a "suggested price" that comes from the actual manufacturer and depends on the actual target market. Yes, the price of a product in Ontario is not the same as one in Yukon. The demand is different, and so is the audience and the market.

This is why you see that Sedan vehicles are more expensive in provinces with huge Cities and cheaper in the northern ones, where SUVs and Pickups are more popular, mostly because of weather conditions. If you go to any manufacturer website, you can try to configure the vehicles using the "Build Form" and change from one province to the other one.

Cash Purchase 2% of People

If you are making a cash purchase of a new car (which is the less likely alternative for most new car buyers) then you will be probably paying:

  • Single Total Payment = MSRP + "Transportation & Pre-delivery Inspection (PDI)" + Sales Tax

Financing and Leasing Options 98% of People

Most people finance their new car acquisition. Moreover, even used cars. The main differences with the Cash Purchase are that instead of a single payment, you have multiple options to set up the monthly payment term, and then, because of this, an interest rate. This Interest Rate will depend on the buyer's Credit Score.

Car MSRP Loan Canada

Chevrolet Canada offers the 2018 Equinox financing for 84 months at 0% interest rate for many submodels.

Financing is regularly longer starting at 12 months and sometimes up to 84 months or 7 years. Leasing begins with the same minimum term and usually goes up to 60 months on popular brands and up to 48 on luxury vehicles. 

Both prices are calculated using the following formulas:

Car Payment Financing Formula:

  • Total Payment = MSRP + "Transportation & Pre-delivery Inspection (PDI)" + Interest Rate + Sales Tax
  • Monthly Payment = Total Payment / Contract Term

Car Lease Financing Formula:

  • Total Payment = MSRP - Residual Value + "Transportation & Pre-delivery Inspection (PDI)" + Interest Rate + Sales Tax
  • Monthly Payment = Total Payment / Contract Term

Car Loan

Car Loans are handy for getting better interest rates than the ones provided by the manufacturer. While these are usually really hard to beat, depending on your situation, going through a loan is a better alternative.

If you have a Good Credit Score, you can get better rates with your bank in situations where you are interested in financing a vehicle. While the manufacturer offers a default 4.9%, your bank could come up with a 2.9 or 3.9.

On the other hand, if you have a Bad Credit Score, the offered rate from the manufacturer can go higher than the default one for the term you are interested in, so you should consider alternative ways to pay a lower interest rate on these cases.

CanadaDrives is the #1 Car Loan Agency for Canadians, and it offers many competitive plans, no matter what your situation is:

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About the author

Jorge Diaz is a passionate car lover, winter driver & Software Engineer. For the last 10 years, he has built Online Solutions used by more than 5,000 companies across the globe. He founded LeaseCosts in 2016 with the purpose of simplifying and helping Canadians to better understand the complex market of car leasing in Canada. You can connect with him at

Jorge is also the author of Car Leasing Done Right: A Canadian Guide for Understanding & Optimizing Vehicle Leasing Costs, released on Nov. 5th, 2021. It is available at