The Out-the-Door Price: What You Actually Pay for the Car

The lines on a buyer's order

A dealer writes the deal on a buyer's order, sometimes called a purchase agreement, before the financing contract is printed. Read it line by line. Most orders follow this pattern, though the labels vary.

• Vehicle price: the negotiated selling price, after any discount or rebate.
• Dealer add-ons: products or equipment added by the dealer, such as window etching, a service contract or GAP coverage.
• Documentary fee: the dealer's charge for preparing paperwork. Some states cap it.
• Sales tax: set by the state and often the city or county.
• Title and registration: government charges, which the dealer collects and passes on.
• Trade-in: the allowance for your old car, the payoff owed on it, and the difference.
• Cash down: the money you pay at signing.

The total before the trade-in and cash is the out-the-door price. After them, the balance becomes the amount financed on your retail installment contract.

Doc fees and what states allow

The documentary fee is set by the dealer, not the government, even when it sits next to the tax and title lines. A few states limit it; many do not. Where there is no cap, treat it as part of the price you negotiate.

Each state page lists its doc fee rule, if it has one. A cap is a ceiling, not a standard charge: a dealer may ask for less. In Texas, the $225 figure applies unless the dealer has filed a cost analysis with the Office of Consumer Credit Commissioner, so a higher fee there is not automatically a violation. Ask the dealer to show the approval if the fee is above the cap.

If a dealer will not lower a high doc fee, you can ask for the same amount off the vehicle price instead. Either way the saving lands in the same place, and the out-the-door total is the number that shows whether it happened.

Sales tax and the trade-in

States differ on whether your trade-in lowers the taxable price. Texas charges 6.25% on the price minus the trade-in allowance. California does not subtract the trade-in, so you pay tax on the full price. On a $30,000 car with a $10,000 trade-in, at a 6% rate for illustration, that is the difference between $1,200 and $1,800 of tax.

Rules on whether doc fees and add-ons are taxed also vary. Ask the dealer to show which lines the tax was calculated on, and which rate it used, including any city, county or district tax. If you are buying outside the area where you live, ask whether the quote uses your local rate.

In a private sale there is no dealer to collect the tax. In Texas, for example, the buyer pays it to the county tax office within 30 days. Include it in your budget even when it is not on the seller's bill of sale.

A worked out-the-door example

At 7% APR for 60 months, $19,545 costs $387.01 a month and $3,675.60 in interest. Remove the $795 add-on and the payment falls to $371.27, with $3,526.20 in interest. Financed, the add-on costs $944.40 in all. Put your own numbers into the out-the-door price calculator.

Why the monthly payment hides the price

A salesperson who asks what payment you want can reach almost any figure by changing the term, the down payment or the products in the deal. The FTC notes that 72- and 84-month loans lower the payment but usually cost more overall, and suggests comparing offers by APR, term and amount financed. Two quotes with the same payment can differ by thousands of dollars in total cost.

The FTC also suggests getting rebates, discounts and incentive terms in writing, with any conditions attached. If a rebate comes with a condition about how you finance, price the deal both ways, with the rebate and with your own loan, and compare the totals.

Add-ons and fees worth questioning

How to get and compare out-the-door quotes

1. 1 Request the out-the-door price by email from several dealers for the same model and trim, with each line itemized.
2. 2 Settle the price before the trade-in. The FTC suggests negotiating the car first, so a trade-in offer cannot hide a higher price.
3. 3 Compare totals, not payments. A lower payment can come from a longer term or a missing line.
4. 4 Check the contract against the quote. The cash price on the financing contract should match the price the dealer sent you.
5. 5 Keep a signed copy of the buyer's order and the contract.

Questions people ask