What’s the Out the Door Price for a Car?
I am a serial entrepreneur and a consumer advocate. When I’m not helping car buyers, I love working on ventures that have a positive impact. I run a cause marketing agency and serve on the board of Vayu Global Health where we are disrupting the medical industry and preventing the needless deaths of mothers and babies during childbirth.
When negotiating the price of a car from a dealership, many shoppers make a huge mistake.
They don't ask the dealer for the out the door (OTD) price.
To get the best possible deal and avoid unexpected costs, you must understand the meaning and importance of the out the door price.
Table of Contents
Out the Door Price Explanation Video
What's the Out the Door Price for a Car?
The out the door (OTD) price is your bottom line when buying a new car. The price on the windshield is NOT the OTD price. Instead, your total for the new vehicle, which includes all fees, is the OTD price. Dealers do not advertise the total price for cars.
What's Included in the Out the Door Price
Selling Price. The amount you agree to pay for a vehicle is the first part of the out the door price. This is the value commonly advertised on the vehicle and what most dealers will negotiate.- Taxes. Most states charge sales tax for vehicle tax, and the sales tax amount varies by state.
- Title. To legally own a car in the United States, you must have a title in your name. The cost of requesting a title is usually relatively low.
- Registration. State governments also charge a registration fee. The cost to register a car will depend on your state.
- Documentation Fees. Dealers will not disclose the documentation fee unless you ask for the OTD price. Most dealerships charge them, even though they are not mandatory, and the dealers can determine their own documentation fee.
- Accessories. Many dealers will upsell accessories for an additional price. They rarely include these accessories in the price you negotiate, so they can take you by surprise when you get the OTD price.
- Destination Fees. Some automakers charge for transporting the vehicle from the factory to the dealership. The dealer will pass this cost to you as part of the OTD price.
- Dealer Preparation. Routine maintenance and checking that dealers do to ensure the car is ready for sale.
- VIN Etching. Many dealers etch the VIN into the vehicle's windshield as an anti-theft measure.
- Dealership Fees. Dealerships may also charge handling, advertising, or processing fees. The manufacturer imposes advertising fees, but dealers may tack on an additional charge to increase their profits. Be sure to review your vehicle purchase agreement for any extra fees.
- Extended Warranties. Car dealers are eager to sell extended warranties for additional profits. The warranties are not required, but they may not always be clearly defined unless you ask for the OTD price.
MSRP vs. Out the Door Price
Car buyers often negotiate the manufacturer's suggested retail price with dealers rather than the out the door price. The MSRP is the price often advertised in the car's window and by dealers, but it's typically much lower than what you'd actually pay for the vehicle. You must remember that the window stickers or MSRP do not represent the vehicle's total cost when car shopping. Ultimately, MSRP is one big part of the OTD price.
Negotiate with the OTD Price
Many dealers will not disclose the OTD price unless you ask directly, so make sure to do so during your negotiation. Dealers often list their lowest price (just the MSRP) and do not include the doc fees, accessories, and other fees that will spike up the OTD price.
To protect your budget, plan and make sure what you will pay aligns with your budget. Here are some ways to plan ahead with the OTD price:
Use Online Calculators to Estimate the OTD Price. Instead of relying on MSRP when searching for vehicles, use an online tool to estimate the OTD prices. This will give you an idea of the OTD price before dealing with negotiations, so you can focus your time and energy on the vehicles that will meet your budget.- Negotiate the OTD Price. Instead of only negotiating the monthly payments based on the MSRP, focus on the out the door price. You can reduce monthly payments by lengthening the loan term, but you'll end up paying more interest this way.
- Get a Car Loan Preapproval. Lenders tell you how much you can borrow when you get a car loan preapproval. Using this information, you can ensure that the vehicle's OTD price does not exceed the preapproval amount.
