Out The Door (OTD) Pricing questions

mdxn · December 2001

When you present a dealer with your absolute lowest OTD price (ha!)--what does that actually include? I need it spelled O-U-T for me: i.e. advertising fees, Title fees? Filing fes? etc etc etc....what? Do I include those all in my OTD price? or is that extra? how do I know what is a "reasonable" advertising fee? etc....Am I just spinning my wheels? Should I just find the Edmunds TMV and subtract $500 or should I spend all this time looking up these tedious details?

Thanks

vwguild · December 2001

It is probably best to concentrate on the price of
the car that you want, rather than an OTD price.

Over and above the price of the car there should be the following: Sales Tax, DMV Registration, a
reasonable($45-$75)Document Fee, and any State
applied fees. For example, in California we have
a $5.00 *Tire Fee*, and a $6.00 Smog Fee.

This is it...no ups & no extras...

You can find out from your local AAA or DMV what
should be standard stuff in your state.

Ad Fees are Regional and can range from 0 to $300+, but
these are included in the price of the car, and should
not be added in afterward.

fpereira · December 2001

Out the door price includes everything, including all fees, sales tax, registration fee, and license fees. Everything.

emaison · December 2001

I will have to respectfully disagree with vwguild. While I agree that state tax, registration, reasonable doc fees, and state fees are essentially 'fixed' fees, I would still be concerned with OTD price. This price is like fpereira said, the cost of everything. There are too many confusing things the dealer can add (ie other overhead etc). Do your research, find out your OTD price and stick to your guns. As a consumer, I dont care how the dealer calculates my OTD price, all I care about is my out-of-pocket expense.

abtseller · December 2001

wrong about the advertising fees. For example, Toyota adds ad fees to the invoice number that you will find on Edmunds. The ad fees are on the actual invoice from Toyota, and they are part of the cost of the vehicle to us. You will also read about the dealer holdback. Usually the holdback is not part of the "on line" invoice prices, but it is part of the car's cost when we buy it. Doc fees are something that I (as a salesman/manager) have no control over. You then have sales tax, tag fee to the DMV, and that is it (at my dealership, anyway).

I think the bottom line is to compare "out the door" numbers between different dealerships, and if you find one $500 or so cheaper than the other, ask the more expensive one for a breakdown/explanation if you want to give them a crack at your business.

Ed

mvargo1 · December 2001

Out the Door is just that. It is the price you pay when you drive the car out the door. The out the door price includes all taxes and fees. It is the amount you actually write the check for. If oyu are financing or leasing it includes the total money due at delivery, not just the down payment and what the payment you will actually be making every month.

vwguild · December 2001

Help me out here!!!!

navy4 · December 2001

The amount on the check you write or the bottom line on the financing contract. It includes sales tax, delivery and handling (if the dealer has it), and doc fee. At least at the dealer I worked at. All you have to worry with is the license fee, if the dealer doesn't collect it for the state.

If you are shopping for OTD price. The TMV is only the starting point, you have to add the above fees, which are legit.

If the OTD price is higher than you like, look somewhere else.

mirth · December 2001

Okay - let's say the dealer has some legit fees, be they advertising or floorspace or port fees or whatever. As a buyer, I want to know what these fees are from the start - I don't want to be blindsided by them after I thought I negotiated the final price. That's just the dealer being sneaky and betting you won't walk away after investing so much time.

For example, let's say you spend a half hour negotiating and the dealer's final offer is about $100 more than you wanted to pay. But you figure, $100 isn't so big in the scheme of things and it's not *too* bad a price, so you accept. Then, after an additional 30-60 minutes of paperwork stuff, they hit you with an additional $100 processing fee. Suddenly the okay deal is a bad deal. I know a lot of dealers would say that a customer was nickel and diming them over $100, but the fact is that the customer in this situation already went over their budget by $100, so now we're talking $200. So now, if the dealer won't budge on the deal, you have wasted about an hour of your time.

Sorry to rant, but I've been in this situation before and it just seems like an insult to my intelligence.

im_brentwood · December 2001

An OTD price ought to include:

1) Car Price. If there's an advertising charge on the invoice, then it ought to be included in the sale price of the car. I.E. Say there's a $200 regional advertising charge and you're paying $500 over, then it ought to be, say, $700 over what you see on the net.

2) Any DMV/Tag/License/etc fees

3) State sales tax

4) County surtax if applicable

5) Any dealer prep fees.

I.E. "This car is $20,565, OTD it's $22,107.45

Or whatever. It ought to be the amount of the check you have to write.

Bill

emaison · December 2001

I think the price of the car (not the OTD) is irrelevant(sp?). When I bought my car, I offered an OTD price. The dealer accepted. When I got the 'Buyers Order' it showed the price of the car + addtl dealer markup + appearance package. They even showed a dealer processing fee in another column. I think all us consumers can look at those extra columns and say they scream overhead costs. But you know what, I didnt care how the dealer calculated his totals on the Buyers Order. I did my research, I knew my OTD and the bottom line was all I cared about. The 'total amount due' equaled my OTD offer. My point is that the dealer can calculate that 'car price' to be whatever he wants. Just worry about your OTD total.

brentwoodvolvo: Ok, I'll bite, what kind of dealer prep charges are you referring to? (#5 above)

mirth · December 2001

The $300 can of Scotch Guard. ;-) (Sorry, couldn't resist.)

im_brentwood · December 2001

haha

Nah, I mean like doc fees.. dealer fees..whatever they call them.

Bill

rroyce10 · December 2001

..... On these OTD prices, just make sure that your "point of of payment" includes ..The taxes (if applicable), ..The DMV, Lemon law, tire and battery tax..etc.

After reading dozens of posts on this subject, I feel the biggest "miss-understanding" is when a consumer wants to be at .. let's say, $300 a month -- they have done their homework, studied the options etc, etc, .. let's say, in the consumers mind, they need to be at $15,000 TBF(to be financed).. that's the "point of payment".

What sometimes happens is, the dealer backs out the taxes and (real) fee's and such, and he is below cost -- that's the rub..! -- the buyer feels that $15,000 is the bottom line and the dealer is at $16,100 TBF, now the payment is, let's say $320...I think this cause's the biggest problem..A OTD price is meaningless unless it's in the "Strike Zone" of the payment you are trying to accomplish ...

Just about everyone is a payment buyer, whether you make $18,000 a yr or $800,000 a yr .. Save a lot of time and anxiety and just make sure that your OTD price, includes your "point of payment" .. it's very hard for a dealer to eat the Tax, The wax and the Roof racks..

I hope this makes sense..

Terry.

isellpotiac · December 2001

I caught something that I am seeing more and more of. "Should I just find TMV and subtract $500?" 3 Months ago you could close a deal quickly by charging TMV. Now you must beat TMV in order to make the customer feel special.

abtseller · December 2001

just add the holdback back into their invoice? I don't see it like Edmunds does. It is NOT a negotiating tool. It is a stumbling block. I just looked up a Sequoia Limited that we have here on the lot and compared it with the Edmunds invoice, MSRP, and TMV. We're about a grand off, which is made up when you add in the holdback, but it is a pain to have to explain it five times a day. They contradict themselves further when they say to give the dealer a "fair" profit of 5% over invoice. This doesn't add up to TMV at all.

Ed

isellpotiac · December 2001

I have negotiated on holdback exactly once in the last 3 years. I know exactly what you are talking about. As soon as some ediot starts using holdback as his negotiating tool the end is near for him. I know most people will read this the wrong way but I don't get paid on holdback so I refuse to discuss it. The customer that brings up holdback and thinks he is being coy would be shocked at what is going thru my mind as he rambles on about my built in profit. All of the discussions that have been had on this subjuct in this forum have lead to exactly nothing in my mind.

cfg1 · December 2001

Isellp - please check out the GMS topic in Finance.

claywaterfill · December 2001

I never considered OTD before yesterday. Years ago I, too, was a payment shopper. Since I learned how to do a basic payment calculation (give or take depending on my APR), I went to sales price. I was shopping price on a 2002 Civic LX coupe with manual transmission. I had one dealer quote $13,969. Another dealer quoted $14,379 assuring me this was only $300 over his cost because he had to make a little something. I said his price was not bad, but another dealer beat his price by over $400--so were they losing $100 on the deal? He told me to watch out for low quotes to get you in the door and then they hit you with big fees when you get to F&I. He gave me my total drive off cost and suggested I get the other dealer's OTD for a true comparison. I never looked at it that way before. The point is, I don't care what the add on fees are, if the OTD is high, I go to the lower dealer.

claywaterfill · December 2001

The dealer that was $400 cheaper on its selling price was $200 higher on its drive off price!

vwguild · December 2001

Let me have another go at this...You have to negotiate The Price Of the Car...State or Local
sales tax will vary obviously upon where one lives...DMV has to be paid, and this too will vary
based upon where you live...Everybody with me so far? Document Fees should vary once again, but
they are normally in the $45-$75 range...Ad Fees,
the real ones that is, should be included in The
Price Of The Car...Dealer Prep, Arctic Environmental Pkgs., Tire Preservatives, Carpet
Preservatives, and Key hole scratch protection should not be considered as even negotiable, and
are therefore, not part of the OTD price...

Only The Price Of The Car, and appropriate Taxes,
Title, & License make up the OTD Price. And of these, only The Price Of The Car is negotiable...

pepper50 · January 2002

What "documents" are included in these "document fees?" Title application fee should be included in the TT&L fee, so what other documents is it referring to in this additional charge?
Also, what are realistic dealer prep fees? All they have to do is be sure the fluids are full, the plastic wrap is taken off the seats, a visual inspection, and carwash.
Thanks.

rroyce10 · January 2002

........ When you get the OTD price ... is it going to be in your payment range ....?

What most consumers forget about is that 1 little thing -- payment..!

90% of all consumers are payment buyers -- If the OTD price is exactly what they want --- can they afford the payment ....

If you haggle yourself silly ... and get what you want --- make sure you figured in the most important factor ......... your monthly payment..!

Terry.

vwguild · January 2002

The Pre-Delivery Inspection, for VW, is paid
for by VW...There should be no *Dealer Prep*
Charges...

Doc Fees typically refer to the processing of the
actual paper for DMV...not the DMV Fees themselves...so that when you leave in your new
car, all that you have to do is wait for the plates to arrive at your house...

pepper50 · January 2002

Thanks, VWguild, for your statement about document fees. Why is that not covered in the T,T,&L fee? Here in Texas, it's just a one-page form to register with DMV and pay the tax. Another page for title application I suppose. The customer could actually take both pages to the tax office themselves. In fact, I did it myself when I bought a van a decade ago. So assuming all that is covered in the T,T,&L fee, I don't understand what the additional "documents fee" would cover. Or is the document fee the fee for them to carry the two pages to the tax office and bring back the license plates?

vwguild · January 2002

Do you know Claude Pepper???

Actually it is to process the HUNDREDS of DMV
papers that go through in a month...There are
people in Los Angeles that would pay you $500
to got to the DMV for them...:)

eric102 · January 2002

I have never paid a document fee on any of the cars I have bought (about 20), or any other fees. I always keep it simple, negotiate the price of the car from invoice (usually $100 to $200 over)plus tax and license, thats it, no screwing around. I let the dealer know up front thats how I want to do it, and its usually no problem. If it is, then I go down the street to the next dealer. Thats how its written up on the contract also, just the price of the car plus tax and license.

Eric

vwguild · January 2002

I have no problem with that...

abtseller · January 2002

our doc fee is $189. The general line is that is pays the clerks to process paperwork. Whatever. The important thing from my perspective is this...I have no authority to negotiate it from the deal. Neither does the New or Used car manager, neither does the General Manager. The owner is it, and he says don't ask. Fair enough? Luckily, our doc fee is less than most of our competition, and our pricing is aggressive enough to beat most of them anyway, so it rarely makes a difference. If I lose a deal over a $200 doc fee, I either wasn't doing my job properly in the rest of the process, or come survey time, I probably didn't want it anyway.

Ed

postoak · January 2002

However, it can be divided into 3 components:

1) Dealer charges
2) State sales tax on dealer charges
3) Title and license charges

2 and 3 are set by the government. You need to find out what they are before going to the dealer, otherwise, I fear (but don't know if this is possible) that they might try to add some dealer profit into 3.

For example, suppose title fee is 15.00 and license fee is 80.00. Can the dealer charge more than $95.00 for "title and license"? I suspect they can.

jspata4a · July 2003

ok, i'm reading a lot about getting the car of my choice (2003 Honda Accord EX-L) for $200 over invoice - but what i want to know - how do i compute all the other costs? or in other words, the final OTD price? is this just Tax, Tag, Title? and what do those run? at the end of the day - will the OTD price (including everything) roughly be equal to the MSRP price? please fill me in - this will be the first tiem i've bought a car by myself and want to get the best deal i can. im payign cash - if that matters. lemme know!

mirth · July 2003

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.

blane · July 2003

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.

jratcliffe · July 2003

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).

audia8q · July 2003

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...

bobst · July 2003

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.

winbro · July 2003

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.

mikefm58 · July 2003

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.

user777 · July 2003

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.

blane · July 2003

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.

bretfraz · July 2003

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.

blh7068 · July 2003

"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.

user777 · July 2003

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.

audia8q · July 2003

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.

dbgindy · July 2003

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.

blane · July 2003

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.

KCRam · July 2003

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
Host
Smart Shopper and FWI Message Boards

blane · July 2003

kcram:

At least WE are in total agreement here.

atlantabenny · July 2003

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.

user777 · July 2003

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.

blane · July 2003

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.

Out The Door (OTD) Pricing questions

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