Out-the-Door Price: Everything You Need to Know
The sticker price is only part of a car's out-the-door price. Learn more about what an out-the-door price includes and how to negotiate it.
The car purchase process involves a variety of costs. The first sticker price you see on a car's windshield or online is one price, but there are additional costs involved to get the final amount you'll pay. Asking for the out-the-door price for your desired vehicle can help you get clarity in the negotiation process. After that, you can discuss all the costs involved in the sale so you aren't surprised by additional fees after negotiating takes place.
What the Out-the-Door Price Includes
When you select a budget for a car, you may assume that if you have $25,000 to pay in cash, you can shop for any car with a manufacturer's suggested retail price (MSRP) of $25,000. It's a logical idea, but the reality is that the MSRP doesn't usually include everything that will eventually make up your out-the-door price.
The out-the-door price, put simply, includes everything in a car sale contract. It should include:
- Any fees or taxes
- Upfront costs associated with a car loan through the dealership
- Service contracts
- Packages of any kind
If there's even one more cost to add in before you get the keys and drive away, you haven't found the true out-the-door price yet. This price is the amount you pay (or the balance on the loan you take out) when you've factored in all upgrades, taxes, fees, and warranties or service agreements. It also has any down payments or trade-in values deducted from the total.
The out-the-door price is important to determine because you want your budget to truly reflect what you'll end up paying. Asking for this price can get your salesperson to start talking through every possible cost and can help you know where negotiation is possible.
Fees Increase the Price
Your car costs will most likely include registration, tax, title fees, documentation fees, dealership fees, or destination fees. Registration, tax, and title fees are generally set and rigid, but sometimes dealer or documentation fees can be reduced through negotiation.
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You might not want to start a negotiation based on a sticker price when other negotiable costs will be added later. It's helpful to have a breakdown of all costs so that you're both negotiating and reaching a final deal based on all the information available.
Down Payments and Trade-Ins Decrease the Price
You may also consider factoring any credits into your out-the-door price, which will be either the total balance on your car loan or the cash amount you pay to take possession of the car. Any down payment you make as you start a car loan or the value of your trade-in will bring down the out-the-door price .
How to Negotiate Your Out-the-Door Price
Dealership representatives may show you cars based on your stated budget range, but they may use the sticker price instead of the out-the-door price. If you specify, "I want to be out the door paying between $X and $Y," you can return to this number when all the fees and add-ons are finally spelled out, pointing to fees that push you out of your range. Of course, the dealership representative may not have wiggle room, but you're sticking with exactly what you said you could do, a strong negotiating position.
Keep in mind that many additional add-ons — including warranty packages, interior or exterior packages, and trims — may drive your price beyond where you feel comfortable. Ideally, you can research which add-ons you want so you can confidently say yes or no to the options you're offered. Otherwise, having to make split-second decisions while finishing up a pile of paperwork may leave you with different optional costs than you would have chosen with more time to think.
Ultimately, asking about the out-the-door price allows you the opportunity to communicate clearly with the salesperson regarding exactly what you want. You have the option to walk away if you aren't ready to purchase under the current conditions. It's an empowering way to steer your negotiation conversation.