The outside price of a car is the amount you would pay to walk out the dealer’s door with key in hand.
Whether you are a seasoned buyer or a first-time buyer, the chances are you heard the phrase. The external price, sometimes abbreviated as OTD, includes all taxes, fees and extras.
When writing a check, the outside price is the amount you would enter. When you take out a loan, the amount you borrow and the outside price would be the same. The out-the-door price is a single number that usually includes:
Vehicle sales price.
Dealer added extras, often listed on a window sticker.
Guarantees, Gap insurance and other financial products that you consent to purchase.
The external price does not include the insurance costs or the interest that you may pay over the life of a loan.
The outside price paints a clear picture of what you are buying. If you go to the dealership and focus solely on your monthly payment or don’t pay a specific fee, you may be overlooking the real price of the car.
Use the outside price when negotiating
Car dealers and sellers are very familiar with the term and its content.
When you buy a new or used car, negotiate in terms of outside price rather than discussing every single item or extra. At the end you write a check.
You can agree on the external price with the sales team and will then be handed over to the tax office, which will offer you further financial products. If you accept them, they will be added to the open air price.
Another reason to use OTD in your negotiations is that it can keep temptation at bay. Without a full picture of long-term costs, you could be tempted to fund a more expensive car.
For example, a monthly payment of $ 500 at an annual rate of 6.61% means you can fund $ 2,038 for 48 months – but $ 29,651 if you expand to 72 months.
That sounds great until you compare how much interest you would pay: $ 2,961 vs. $ 6,348.
How to calculate an out-the-door budget
The calculator below turns a monthly payment into a budget that you can use when you submit an application pre-approved loan.
Once you see what your payment can buy, add up a cash deposit or the value of your trade-in (make sure to subtract your debt, if anything) to get yourself a standard figure to shop for.
Vehicles are rarely advertised at the external price. A good guideline is to subtract at least 10% from your shopping budget to allow for fees and taxes.
If you don’t remember anything else at the dealer, remember your outside result.