Most car buyers look to save time and money by focusing on out the door price. Instead they end up spending more time and money had they negotiated based on car price first. I show you how in this video:
0:00 Out the door price on car
0:23 Car buying tips
0:53 What is out the door price? (Out the door price meaning)
1:13 My first time negotiating out the door price
2:10 Find the best car price
2:26 Example negotiating out the door price on a car
6:21 What do car dealers really think about out the door price?
What is out the door price on a car?
Out the door price on a car is the total cost of the purchase.
Including:
- Sale Price
- Sales Tax
- All Other Fees (Registration, Document Fee, Destination & Delivery)
- Trade-in Value (if applicable)
Excluding:
- Car Insurance
- Post Agreement Add Ons (at the Finance Desk)
Negotiating out the door price is a convenience, and car buyers pay a premium for not working with the details.
The first question a manager at a car dealership will ask is, “Where is the buyer going to register this car?”
Sales tax varies by state, county, and city. There are other considerations as well such as some states tax manufacturer’s rebates and some states allow a sales tax credit on the trade in value of the vehicle.
Because your ability to negotiate is proportional to your ability to walk away, I recommend seeking multiple offers from dealers around the region and even out of state. This only increases the likelihood of a seller not understanding your specific tax situation when negotiating out the door price. This makes the task of back calculating the sale price of the car even harder.
And ultimately that’s the most important question to the dealer. “What are we selling this car for?” Instead of back calculating the exact sale price of the car from the out the door price, a dealer will round up ball park numbers as a factor of safety, always looking out for their own best interests so they don’t get burned. This mean the car buyer is now paying a premium because they chose not to focus on sale price first. Because this back calculating sale price from out the door price is so tedious and carries a high risk of making a mistake, a dealer will be much less likely to engage in a back and forth negotiation to avoid recalculating sale price again and again. Ultimately the dealer will spend more time on the first offer, and much less time on every back and forth, or may just stop at a take it or leave it.
If a car buyer does want to get into specifics of each line item, the better approach is to focus on agreeing to the purchase price first.
There is quite a bit of conflicting advice on the car business on YouTube. I’m certainly biased but I believe I’ve made the only videos you need to watch to cut to the fundamentals:
I made this video to explain how to make make a fair initial offer on a used car:
https://youtu.be/ozkOrmz_8lw
And how to make a fair initial offer on a new car:
https://youtu.be/TcRVHIFSJHw