When you go to a dealership to buy a car, you’ll likely hear a bunch of different acronyms and terms used to describe prices. Sticker price, MSRP and out-the-door price are just a few of the examples. Out-the-door pricing is commonly referred to as OTD pricing, which differs from the sticker price and MSRP. The out-the-door price means the total amount you’ll pay for the car including fees and sales tax.
What is the Out-the-Door Price?
The best way to explain the out-of-door price is that it’s the total cost you’ll pay for the car when you’re walking out of the dealership with the new keys in hand. This is a number you’re going to want to know before buying a vehicle so you have more room to negotiate certain costs. For example, if you know the dealership fee is $500 on top of the MSRP, you may be able to negotiate them waiving that fee.
The out-the-door fee can also be affected by the amount you put as a down payment and if you have a vehicle trade-in. When you’re negotiating on the total price of the car, it’s smart to request that the down payment and trade-in are not factored into the amount you pay. This allows you to see how much the vehicle will cost to finance before you put any money down.
What Does the Out-the-Door Price Cover?
- The price of the car
- Dealership fees
- Sales tax
- Vehicle title and registration
- Documentation fees
- Extended warranty
- Gap insurance
The Difference Between OTD and MSRP (Sticker Price)
The main price you’ll see advertised by dealerships is the manufacturer's suggested retail price (MSRP). This is the number you see on the windshield of the vehicles in the lot and this MSRP is commonly referred to as the “sticker price”. While the manufacturer suggests this price for the vehicle, most dealerships will still let this price be negotiated on.
But be aware, the MSRP is going to be a much lower number that the out-the-door price as the MSRP doesn’t include dealer fees, tax and more. This is why when your negotiating with the sales person that you don’t negotiate on the MSRP but the OTD price. The difference between these two prices will significantly affect your monthly payments.
Negotiate on the Out the Door Price
The way dealers try and make the most money from a car purchase is by having the customer focus on the monthly payment. For them, it’s easy to make some changes in the loan term and interest rate in order to make something you may not be able to afford seem affordable. Knowing this, you need to make sure that all negotiations are focused on the OTD price and nothing else. This ensures you don’t up buying a car that’s out of your budget.