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Out The Door (OTD) Pricing questions

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  • mirthmirth Posts: 1,212
    You can find out how much tag and title is from your state's DMV - they probably have it posted on their wed site. Tax is the sales tax for your state - here in Michigan it's 6%. Most dealers have a document fee that can run anywhere from $40-$400. $40-$50 is reasonable. Add all that up and you have your OTD.
  • blaneblane Posts: 2,017
    jspata4a:

    You should only be concerned with how much above (or, even conceivably below) the dealer's invoice COST (not MSRP) at which you will be making your deal. (Edmunds has good links to enable you to make such calculations.) That is the real number to compare with other purchasers in other states and cities.

    The taxes and fees, tradeins etc are locally variable and should not enter into your calculations.
  • jratcliffejratcliffe Posts: 233
    Actually, OTD means a lot. You should be trying to get the best aggregate deal, regardless of what the line items on the deal look like. For example, three deals:

    1. $20k for the car, $6k for the trade, $1k in fees: Net $15k OTD
    2. $21k for the car, $6k for the trade, $0 in fees: Net $15k OTD
    3. $20k for the car, $5k for the trade, $0 in fees: Net $15k OTD

    At the end of the day, it's that OTD number that really matters. Whether it's a "fee" or the price of the car itself, it's still cash out of your pocket. As for trades, locally variable numbers _do_ matter. If, for some reason, your trade is worth $2k more at a dealer in the next town, then, even if that dealer wants $1k more for the car they're selling you, you're still $1k ahead of the game (assuming that driving one town over is worth $1k to you - it's not for some people).
  • audia8qaudia8q Posts: 3,138
    Only worry about how much you write the check for....The OTD number is by far the best way to compare deal...

    Don't let anyone fool you into worrying about XXX over invoice. This makes it way to easy to add a whole host of fees that will be sprung on you at delivery...
  • bobstbobst Posts: 1,783
    We bought an Accord EX a few years ago and computed an OTD price like this: invoice (I forgot what it was) + transportation + $150 for options + $250 for dealer markup. Then we added 3.1% Virginia sales tax and $50 for tag/title. It came to $20300.

    We offered that, they refused, we stated to walk out, and they accepted. The whole process took about 10 minutes.
  • winbrowinbro Posts: 235
    you really should take your state tax out of the equation if you are comparing to what other's are paying. for instance my accord in NY has 7.50% sales tax (OUCH), over twice the tax the person in Virginia paid.
  • mikefm58mikefm58 Posts: 2,882
    Since that's the total price we pay and some dealers like to add special fees. Here in Orlando county Florida, OTD equals purchase price + 6.5% sales tax + 22.50 for doc. stamps + about 3.50 for battery & tire waste fee + registration which can be found on the DMVs website.
  • user777user777 Posts: 3,341
    Does "OTD" in this discussion, also mean the final amount paid for the vehicle (once you turn over a check from the financial institution including your cash and downpayment), the eventual "cost" of the financing you're using (if any)? I realize, if you have the cash..interest paid..that's a non-issue.
  • blaneblane Posts: 2,017
    OTD shouldn't mean much to participants in forums such as this when there are so many local variables. Someone on the west coast shouldn't care if someone on the east coast has a different tax rate. Someone buying without using a tradein shouldn't care if someone else got $500 or $15,000 for their tradein. Interest rates and down payments are highly variable depending upon who the purchaser is and who the lender is. Someone who pays exhorbitant fees can't relate to someone whose dealer doesn't pad the bill the same way. Cheaply available extras that a dealer throws into a deal, such as fancy lugnuts, mudflaps, upholstery spray, paint "protectant" or pinstriping don't mean anything to someone else buying a car without them. They are meant, by the dealer, to cloud the issue.

    We can all relate to a few basic, clearly ascertainable factors.

    1) What is the MSRP (sticker) price of the vehicle as equipped by the factory? Never negotiate down from here.

    2) What did the dealer pay (invoice) for the vehicle as equipped by the factory, destination charge included? Always negotiate up from here.

    3) What is the amount of Dealer Holdback (2%, 3%, etc) that must be added to #2, that can possibly be partially deducted in negotiations?

    4) What is the local dealer advertising cost that must be added to #2? Perhaps $200?

    5) What is the minimum amount of profit ($100 to $400?) that a dealer will accept after adding #3 to #1 and then deducting #2?

    Ask the dealer to show you his cost figures. These are the figures that EVERYONE should be using when discussing what they've paid. When you add all of the local gingerbread, you reach a only a personally meaningful OTD. But it should mean very little to anyone else.
  • bretfrazbretfraz Posts: 2,021
    I also think OTD is what buyers should focus on. In BLANE's 5 point example there are too many variables and unknowns for a buyer to figure out on their own. Asking the dealer for his cost figures may get you nowhere. Why work with all these assumptions and risks?

    Here's the primary reason I like using an OTD figure: It put the pressure to make the deal on the shoulders of the dealer.

    I agree there are individual variables (not local, really, as each deal is separate unto itself). So there's no point in trying to compare your deal to someone else's, no matter where they are.

    But by using an OTD price it forces the dealer to make the numbers work and seal the deal. As a buyer you just sit there, enjoy their free soda, and relax, knowing that you are in the driver's seat. If the salesperson comes back with a counteroffer, you again are in control: Take the offer, revise your original offer a little, walk out the door, whatever.

    Negotiating up from invoice will work on SOME cars and SOME deals. But negotiating from an OTD price will work on ALL cars and deals. Doesn't matter where you are or what you're buying.
  • blh7068blh7068 Posts: 375
    "Someone on the west coast shouldn't care if someone on the east coast has a different tax rate."

    True-but thats not the point. The point that was made by Rich(audia8q)is why OTD is important- that is the amount you are writing the check for.

    The educated consumer can do his/her own math. If you are prepared to make an OTD offer find out before hand what additional fees such as title, doc, advertising(and sales tax, if paid at time of purchase)the dealer charges- then include them in your offer. Your OTD offer will limit the ability for them to throw in items you may not want like the "mop and glow" and that extra insurance(choke and croak? LOL)when in the F and I office signing paperwork.

    I echo what bretfraz says. Well put.
  • user777user777 Posts: 3,341
    all good information discussed.

    since there are many variables; in a market with many dealers i found it useful to use a spreadsheet to track all this stuff and for comparing a potential deal up against another. i couldn't juggle all those variables otherwise.

    getting an OTD price tends to force all the fees and allows one to determine how the figure was arrived at.

    as far as using a spreadsheet to help you is concerned, if you include a loan-payment-interest paid capability, now you can check out and compare various scenarios as to "what's it really going to cost"? if you finance some and cash some.

    plus, you have a really good handle on being able to quickly notice discrepancies in any paperwork.

    if you know how to use a spreadsheet program like Excel, it can help you even if you are dealing primarily with one dealership compare a few cars up against one another, say a few model/trims, extras, and as mentioned, financing / downpayment etc etc.

    with it, you can also document the details of offers (potentially incomplete) and counters.
  • audia8qaudia8q Posts: 3,138
    the big problem with Blanes way of buying a car is it's 5 points to haggle instead of one....

    I can assure you that if your going to haggle 5 different aspects of the sale a good salesperson is going to win...

    keep your eye on the bottom line!!! it's the only number that matters.
  • dbgindydbgindy Posts: 351
    Keep your eye on comparing the bottom line. That's the true OTD price. How much is this going to cost including everything (fees,taxes,docs). How it's broken out is a secondary concern.
  • blaneblane Posts: 2,017
    Folks, you are missing my point here. I totally agree with you that an OTD offer is important to your OWN (bottom line) deal.

    My point is that in using these boards, someone's personal OTD price based upon their personal inputs such as tradeins, options, local taxes, fees, etc, are useless to someone else for whom those numbers are quite different. In fact, those OTD numbers could be thousands of dollars different. However, they are being read by a possibly naive buyer who is searching this board for advice. Their personal situation will not be the same as yours. That could cost them big bucks.

    That's why the BASIC costs that I've discussed previously are the only ones that are virtually identical for ALL buyers coast-to-coast.
  • KCRamKCRam Mt. Arlington NJPosts: 3,516
    Blane, the purpose of an OTD offer is what that one consumer should pay for their car. That is apples-and-oranges to asking someone else what they paid.

    When Joe Public wants to copmpare deals, he has a set budget (let's say $25K). Regardless of the cost of the car, the trade allowance, the fees, DMV, and sales tax, all Joe wants to spend is $25K total. When he shops various dealers, it's that $25K OTD price that makes or breaks the sale for him. No matter who he buys from, he will have to pay those fees and taxes anyway, even if he buys out of state - the TT&L applies from his home state, not the sale state.

    If someone from the other side of the country asks him later, "what did you pay?" Joe can validly reply either his OTD total or his new car price. But only his OTD matters to him while he's shopping. Other people's OTD totals aren't as relevant because everyone's budget constraints are different.

    In a nutshell:
    - when researching, discuss purchase price
    - when actually shopping dealers, discuss OTD including TT&L

    kcram
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    Smart Shopper and FWI Message Boards
  • blaneblane Posts: 2,017
    kcram:

    At least WE are in total agreement here.
  • atlantabennyatlantabenny Posts: 735
    Looking to buy an 03 EX V6/auto coupe, I read someone's post here that he got the same car for $24.3k OTD, which includes his local sales tax.

    Since my county tax is different, I recalculated the numbers to show an adjusted $24.5k OTD, or roughly $900 below invoice.

    I then let my dealer know that I can get the car out of state for $24.3k OTD or $24.5k OTD from him. They wanted to sell, so they gave it to me and included wheel locks, mudflaps, cargo net and sunroof visor.

    What did it prove ? That doc fees, ad fees, prep fees, etc. are essentially profit boosters.

    I would thus recommend that anyone wanting to get the best deal to reference the best OTD prices of other people, make simple sales tax adjustments, and ignore superfluous fees to arrive at their own OTD.

    Combined with right timing (month-end, generally) and pre-approved financing (or at least knowing one's beacon score), a top-notch purchase value is at hand.
  • user777user777 Posts: 3,341
    blane, isn't an OTD computed BEFORE you compute the ultimate "cost" to you based on the value of your trade-in (if any)?

    you still have to pay sales tax on the price of the car...your trade-in comes after.

    maybe i have this wrong:

    if you know my OTD, and you know my sales tax, you have just about EVERYTHING needed to compare my deal to yours...you should be able to assess those mysterious fees / "profit boosters". those doc / registration(?) fees can really be substantial, huh?

    it won't be exact. there's title and tag (which in my area, they are allowed to tax). its funny because some dealers seemed to know this, and others didn't. some put this in the post tax portion of the lineup, and others didn't.

    just my 2cents.
  • blaneblane Posts: 2,017
    user777:

    You have found the REAL problem with what some people refer to as an "Out The Door" price. Somehow, the term came into use fairly recently, but it really doesn't mean much from one buyer to the next, even though some may believe otherwise. I believe that most people who use the term are referring to the bottom line on the check that they end up writing. Tradeins are such a grey area (and meant to be so, by dealers) that they should not be used in comparisons between any two buyers' deals.
  • bobstbobst Posts: 1,783
    When we traded in our 1987 Taurus to get a new 1995 Honda, I offered to give them our Taurus and $13600 for the Honda. They did not accept.

    I went somewhere else and offered $13750, and they accepted. I wrote them a check for that amount and drove the new car home.

    Even if you are doing a trade, if you only discuss the final amount, it makes things much simpler.
  • mikefm58mikefm58 Posts: 2,882
    I see your point now and agree with you. OTD is the price that really counts but it is difficult to compare OTD prices from 2 geographically different areas.
    .
    One more point I'd like to make is to be real careful at contract signing time since the paper work does not mention "salesman and I agreed on an OTD price of $xxx". At my last purchase the dealer figured the sales tax wrong and "could have" come back at me for more money. The contract basically says "Price agreed on is $xxx". Then goes on to list the various state fees and says "if the dealer estimates these wrong, then dealer has the right to go back for the difference." Well if they made a mistake in figuring OTD price (on purpose or not), the customer could be stuck. Luckily for me, I was able to convince the dealer to honor the original OTD negotiated price.
  • mikefm58mikefm58 Posts: 2,882
    <<you still have to pay sales tax on the price of the car...your trade-in comes after.>>

    I think each state is a bit different. Here in Florida I don't pay sales tax on the dollar amount of my trade-in. So if my purchase price is $25K and my trade in is $10K, sales tax is figured on $15K.
  • manamalmanamal Posts: 434
    The thing with out the door, is (ideally) it should be the final number, including tax/tags/fees, etc. On one car, I made the mistake of negotiating the cost at 'car cost before tax'. I figured I knew what the tax rates were. Wel, the dealer added a $100 dollar fee which was 'tax administration fee'. I figured it was part of the tax. Nope.

    This was 12 yrs ago.
  • mirthmirth Posts: 1,212
    blane - I disagree that '$xxx above invoice' is useful in the forums. In that case I want to know the actual price paid on the car (the number). It's relatively impossible to understand what a particular poster's idea of 'invoice' is. Is it the number that Edmunds pops out? Is it the Edmunds number plus the manufacturer advertising costs added in? Did the dealer tell the customer that the doc fee was part of the invoice? You can't know, so when someone posts 'I got $xxx above invoice!' it means nothing to me.

    I agree with you that the OTD price wouldn't mean much here either as a research tool because of local variables. But I definitely use it when shopping.
  • blaneblane Posts: 2,017
    mirth:

    "Invoice" should be something very specific. The Edmunds "Invoice" price should equate to the actual price that a dealer pays, as invoiced to him by the manufacturer. This is also referred to as the "Tissue" price. It's the price printed on the tissue, or invoice.

    The advertising costs that are incurred by the dealer are not "manufacturer advertising costs". Rather, they are the regional costs that a dealer pays to a local dealer group to participate in regional radio, TV or print advertising. Such costs vary significantly by geographic market.

    If the dealer refuses to show you the actual (or photocopy of the) invoice for a specific vehicle, I'd recommend that you say "Thanks for your time, goodbye."
  • mirthmirth Posts: 1,212
    Blane - mostly I agree with you about your definition above (not 100%, but mostly). I'm just saying that when a person posts on these boards about "invoice", I have no idea what definition they are using - yours, invoice with ad fees, invoice with ALL fees, etc. So when someone posts "$XXX over invoice" it doesn't tell me anything because not everyone has agreed to your definition.

    And by the way, there are indeed "manufacturer" ad costs for some makes, which vary from region to region, not just regional dealer groups (like Toyota's SET). Those belong on the invoice. But it doesn't matter because if you don't want to pay them then don't include them in your offer.
  • blh7068blh7068 Posts: 375
    "but it really doesn't mean much from one buyer to the next,..."

    So an example of what you are saying would be comparing buyer A's purchase in California to buyer B (same car)in Texas?

    Well in that case, what you say concerning an OTD offer would apply.

    The educated consumer will/should find out all applicable fees that are added to the agreed price of the car. He or she will do the math and come up with an OTD offer. He or she will also know that comparing OTD's in different geographic areas(in your example)is not useful due to differing tax structures, dealer fees, market adjustments, etc.

    "...even though some may believe otherwise"

    Arming oneself with the correct knowledge will take care of that.
  • isellhondasisellhondas Issaquah WashingtonPosts: 19,670
    Who thinks it's RUDE to ask a merchant, any merchant to show them a copy of their invoice?

    I'm shopping for a hot tub...

    " I would like to see a copy of your invoice"

    " Sorry sir, we don't do this"

    " Well, thank you for your time...good bye"

    I mean, all of this information is readilly avaliable anyway.

    Maybe I grew up in a different time or something...
  • landru2landru2 Posts: 638
    If a deal is at the point where the customer needs to be "proven" what invoice is, the deal is as good as dead anyway. I gave up doing that long ago. No one ever believes what the invoice says anyway. All it does is set the guy up to buy at a competitor where he won't have to lose face by admitting that what thought was invoice was wrong.
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