You are negotiating on a car when the salesperson finally gives you the good price you've wanted. Sensing that you're very close to making a decision to buy, the salesperson might smile and say the magic words: "So, do we have a deal?"

Wait. Don't shake hands just yet. Instead, say your own magic words: "Your price sounds good, but first I need to know the out-the-door cost."

What you're really asking is: "Are there any hidden fees or extras in the contract?" As a buyer, it's better to learn about such fees at this point, before the deal is final, than when you are in the finance and insurance office about to sign the contract.

What's In the Out-the-Door Fee?

At some dealerships, the out-the-door costs are abbreviated as "TT&L" or tax, title and license. This means that, in addition to the price of the car, you typically have to pay the following costs:

  • State and local sales tax
  • Department of Motor Vehicles fees
  • A documentation fee

The documentation fee is set by law in some states, and in others, it's not. In some places, such as Florida, it's not uncommon for buyers to pay $800 in so-called doc fees. In such a scenario, the dealership could quote an attractive price for the car, knowing it would make a profit once it applied the $800 doc fee.

In most cases, when you ask for the out-the-door cost, the salesperson knows exactly what you mean. A good salesperson immediately replies with something to the effect of "besides the cost of the car, you will pay sales tax, DMV fees and a doc fee, which is ..." and then you'll learn the fee. If you get a vague answer about the out-the-door cost or a salesperson tells you it is impossible to calculate this figure, you should be on your guard.

Get an Out-the-Door Preview

You can approximate your out-the-door cost using our car monthly payment calculator. Choose the vehicle you're considering or put in the figure the dealer is quoting you on the line that says "True Market Value." The approximate out-the-door price will be listed in the box called "Calculate Monthly Payment," above the monthly payment quote. Our calculator does not factor in doc fees, so you'll have to add those. The article called "What New-Car Fees Should You Pay?" shows what you can expect to spend in doc fees, depending on your state.

Out-the-Door vs. Monthly Payments

So how does this approach work when your focus is on your monthly payments? Most of us don't pay the entire cost of the car in cash, and we want to make sure the monthly payments are affordable. Further, a car salesperson is likely to open price negotiations by asking: "What do you want your monthly payment to be?" It's easy to fall into that monthly-payment thinking.

But if you focus only on the monthly payments, you won't be able to easily see any hidden charges or learn in advance how hefty that doc fee is going to be. That said, it is still important to know what your monthly payment will be, especially with leasing, so make sure that you ask for that price with taxes and fees included.

You can avoid monthly-payment myopia by securing preapproved car financing. Then you can 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.

Negotiating on the price of the car is a simpler way to go. It's also easier to ask the question that will reveal what you're actually going to pay for the car: the out-the-door cost.