Out-the-Door Price for Cars

The "out-the-door price" or "OTD" is a car business term for the total price of a vehicle with all of the necessary taxes, add-ons, interest rates, trade in price, down payment, and other fees factored in. It allows you to see all aspects of the car deal in one place and gives you a complete picture of what fees you're about to pay. It will also help you identify any hidden fees or extras in the contract. As a buyer, it's better to ask about any line items or fees you don't recognize at this point, before the deal is final, than when you are in the finance and insurance office about to sign the contract.

Here, we'll discuss what goes into the OTD price and how it can impact your next car purchase. But before we can discuss OTD more in-depth, you need to know another set of letters: "TTL."

Jump to:

1. What does TTL (tax, title and license) mean in cars?
2. Out-the-door price meaning and importance
3. How does out-the-door work with monthly payments?
4. Out-the-door price calculator
5. FAQs

What does TTL (tax, title and license) mean in cars?

Every time you buy or lease a car through a dealer, you'll have to pay a sales or use tax, title and license fees (registration). These are collectively known as TTL fees. They are one aspect of the OTD price that are added to every new and used car lease or purchase unless you live in a state with no sales tax. But what are they exactly, and why do you have to pay them? Sales tax or use tax is a state-imposed fee for purchasing certain items (in this case, a car) and is used for local government funding and infrastructure. The title, registration and license fees are paid to your local department of motor vehicles and are used to keep that operation going and issue your documents of ownership and license plates. If you buy the car from a private seller, you'll have to take care of these tasks and associated fees by yourself when you transfer the vehicle to your name.

Tax: Use or sales tax rates vary by state and region, but the nationwide average is about 9%. Some car sales are taxed by cities, counties and municipalities, while other car sales are only taxed by the state. Like your mileage, your tax rate will vary.  

Title: These fees will cover the cost of your official proof of ownership, or vehicle title. If you've taken out a loan, the finance company is the formal owner or "lienholder," and the title goes to them until the car is paid off.

License (and registration) fees: DMVs or Secretaries of State typically have an annual flat rate based on the vehicle type. If you have a vanity license plate, the fees would be included here. In some states, you take your license plate with you from one car to the next, and in others, you get new plates for each new car. Some cities require a vehicle sticker, along with a printout. These annual city and state fees are used for infrastructure costs such as road upkeep. State registration fees can range from $20 in Georgia to up to $900 in Hawaii. 

Pro tip: If you can pay the TTL up front, then you can avoid having to pay interest charges on them. Otherwise, if buyers can't cover it up front, then most of them will have to roll the TTL fees into the car loan. It might be a convenience to roll it into the loan at the point of sale, but it'll more in the long run due to the interest accrued. 

Out-the-door price meaning and importance

The out-the-door (OTD) price is the final price you need to pay in order to go home (out the door) with a car. It gives you a complete picture of what you’re paying and why. Here is where you can spot variations in which dealership is offering a better price on different elements of the car deal.

The OTD price includes the following items:

• Negotiated price of the vehicle: This is the cost of the vehicle after any discounts or potential dealer markups. It may also be the MSRP, but not always.
• Down payment: This is the money you bring into the loan to help offset depreciation and reduce your monthly payments. Read this article for our recommendations.
• The value of a trade-in vehicle: The vehicle you're currently driving can be used as some or all of a down payment. It is then listed as its own line item on an OTD price. Get an instant appraisal here on Edmunds to see how much your car is worth.
• TTL: As we discussed, this covers the state tax, title and license fees and should be included in the OTD price.
• Interest charges: Whenever you take out a loan, there will always be finance charges associated with it. 
• Documentation fee or "doc fee": This fee is what the dealership charges for the labor and convenience of processing your sales contract, loan and registration paperwork. Pay close attention to this figure, as it can vary by state — some have limits on the amount and others allow dealerships discretion to set the fee. Check out our related article, What New Car Fees Should You Pay?, which offers a detailed look at doc fees by state and average registration costs.
• Dealership add-ons: These are the miscellaneous items that don't come with the vehicle and are sold by the dealership. They can vary from accessories such as all-weather floor mats to services such as paint protection and extended warranties. Read more about dealer add-ons here.

It's easy to get stuck in the mindset of only considering the price you see on the sticker or the nice discount the salesperson is offering, but this is an incomplete figure, and what you'll actually pay after all is said and done might surprise you. And those who ignore the total costs end up asking, "Can You Return the Car You Just Bought?" Spoiler: The answer is "no" in most cases.

Knowing the total cost before going to the F&I (finance and insurance) office to sign the contract should give you confidence in your deal-making.

How does out-the-door work with monthly payments?

It is the rare and fortunate buyer who can pay for the entire car in cash. Most of us focus on affording monthly payments, and salespeople are more than willing to make that monthly payment palatable. A salesperson will often ask, "What do you want your monthly payment to be?" While you might have a number in mind, it takes your eyes away from all the other important costs you need to consider. You could end up with a costly 84-month loan that could leave you underwater or upside down.

Another pitfall of focusing on the monthly payment above all else is that it limits your ability to easily see the add-ons or the amount of the doc fee. Ask for an itemized breakdown of what these items actually cost, and not the minimal sum you've been promised it would add to your monthly payment. That's even more important when leasing. Edmunds recommends getting the detailed out-the-door cost before getting the monthly payment. 

One way to avoid monthly-payment myopia is to secure preapproved car financing from a lender independent of the dealer. A preapproval can also provide leverage as a negotiating tool if the terms are better than what's offered from an automaker's captive financing arm. It essentially lets you proceed as a cash buyer, carrying a check from your lender into the dealership with you. Preapproval also lets you gauge whether the dealer's financing is a better deal for you.

It's more straightforward to negotiate the price of the car and work your way up to what you'll actually pay for the car: the out-of-door cost. 

Out-the-door price calculator

If you want to double-check the OTD price you were given at the dealership, or if you prefer to do your own math at home, Edmunds has got you covered. Follow the link here to see our out-the-door price calculator. 

NOTE: Before you head over to the link, it's important to note that this calculator will only be as accurate as the information you put into it. For example, there are several critical fields in which you need to enter the proper figures, such as the interest rate, TTL fees and vehicle price. If they are incorrect, the figures will not match the OTD price you will see at the dealership. The best way to use our OTD calculator is to either treat it as an estimate to see what your monthly payments and loan costs might look like or to have the dealership's OTD numbers in front of you so you can enter those numbers. 

Next steps

You're almost there. Now that you have all the pertinent info and all the associated costs, you can determine if the dealer is offering you a fair price by using the Edmunds Price Checker. Input the details of your deal, and the Price Checker will provide a rating comparing it to what others are paying in your area. This information will give you the confidence to proceed with that deal or search for a better offer.

FAQs

What's the out-the-door price for a car?
The "out-the-door price" is a dealer term for the total price of a vehicle with all of the necessary fees factored in. It includes the MSRP or selling price of the vehicle, sales tax, documentation fees, motor vehicle registration fees, and title and transfer fees. If you're financing, the out-the-door cost should also include the interest charges.

Is the TrueCar price the out-the-door price?
No. The TrueCar price is an advertised price based on the MSRP that the company offers on a given new vehicle at a dealership. It does not include other fees, such as sales tax, title, license and registration fees, so you'd still want to ask for the out-the-door price.

Does the out-the-door price include interest?
Not always. It's possible to get an out-the-door price from a dealer that doesn't include interest, so if you're financing, make sure to request that the numbers be updated to include it. Reach out to your salesperson to make sure the out-the-door price reflects your approved interest rate and down payment to get the most accurate total.

What does "out-the-door" really mean?
The out-the-door price is essentially the grand total of what a person buying a car needs to pay to "walk out of the front door" of the dealership with the keys in hand. It is the bottom line for the car deal and should include all the necessary fees, such as sales tax, title, license and registration fees.

Can you negotiate the out-the-door price?
Yes. In most cases, you can negotiate the out-the-door price. You'll need to focus your attention on the vehicle's selling price and the trade-in offer, if you have one.

How is the out-the-door price calculated?
The out-the-door price is calculated by adding up the vehicle's selling price, sales tax, and title, license, documentation and license fees. If you're making a down payment and financing, it should factor those interest costs in as well.