The out the door (OTD) price is the total you pay to drive away: the negotiated vehicle price plus sales tax and all fees. That OTD figure, minus your down payment and trade-in, is what you actually finance, and it is almost always thousands more than the sticker you negotiated.
Sticker price vs out the door price
The sticker (or negotiated) price is just the car. The out the door price adds everything the state and dealer tack on:
- Sales tax on the vehicle (varies by state and locality)
- Documentation (doc) fee charged by the dealer
- Registration and title fees paid to the state
- Sometimes optional add-ons like extended warranties or paint protection
Here is a realistic build-up on a $28,000 negotiated price in a 7% sales-tax area:
| Line item | Amount |
|---|---|
| Negotiated vehicle price | $28,000.00 |
| Sales tax (7%) | $1,960.00 |
| Doc fee | $500.00 |
| Registration | $400.00 |
| Title | $100.00 |
| Out the door price | $30,960.00 |
That is $2,960 above the price you negotiated. Always ask for the out the door price in writing before you talk financing, because that number is what the loan is built on.
Why this changes your loan and payment
Interest is charged on the amount financed, not the sticker. Finance the sticker ($28,000) versus the full OTD ($30,960) at 7.5% over 60 months and the payment jumps from about $561.06 to about $620.37. That is roughly $59 more per month, purely from taxes and fees you may not have planned for. A cash down payment is the cleanest way to keep those costs from being financed at interest.
New vs used: the rate gap is real
Used-car loans almost always carry a higher APR than new-car loans, because used vehicles are seen as riskier collateral. The rate gap can wipe out part of the savings on the cheaper used car. Compare the same $30,000 financed over 60 months:
| Scenario | APR | Monthly payment | Total interest |
|---|---|---|---|
| New car | 7.0% | $594.04 | $5,642 |
| Used car | 10.5% | $644.82 | $8,689 |
That is about $3,047 more interest on the used loan over five years. Used can still be the smarter buy because the car itself costs less and has already taken its biggest depreciation hit, but you should compare the total cost, not just the price tag. The rates above are illustrative; your actual APR depends on your credit, the lender, and current market conditions.
Dealer financing vs credit union or bank
Dealers usually arrange your loan through a third-party lender and can mark up the rate as compensation, so dealer financing is often a couple of points higher than what a credit union or bank would offer the same buyer. On a $30,000, 60-month loan:
| Lender | APR | Monthly payment | Total interest |
|---|---|---|---|
| Credit union / bank | 7.5% | $601.14 | $6,068 |
| Dealer (marked up) | 9.5% | $630.06 | $7,803 |
That two-point markup costs about $1,735 over the loan. The fix is simple: get pre-approved by your own bank or credit union before you shop. A pre-approval gives you a real rate to beat and turns you into a cash buyer at the dealership. If the dealer can genuinely beat your pre-approval, take their offer. Promotional 0% manufacturer financing on new cars is a separate, often excellent deal worth comparing too.
Putting it together
Three habits keep car financing honest: get the out the door price in writing, secure outside pre-approval before you negotiate, and compare total cost rather than the monthly payment. Do those and the dealer has far less room to bury fees or pad your rate.
Plug your real out the door price and rate into the Auto Loan Calculator to see the true payment, walk through the formula in how to calculate a car loan payment, and confirm the car fits your income using the 20/4/10 rule. To check sales tax on the deal, use the Sales Tax Calculator, and pressure-test the budget with the Loan Affordability Calculator. For neutral guidance on shopping the rate, see the CFPB auto loan resources.
Try it yourself
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Open the Auto Loan Calculator →Frequently asked questions
- What is the out the door price on a car?
- The out the door price is the total you pay to drive away: the negotiated vehicle price plus sales tax and all fees such as doc, registration, and title. On a $28,000 car in a 7% tax area, it can reach about $30,960.
- Do I finance the sticker price or the out the door price?
- You finance the out the door price minus your down payment and trade-in, not the sticker. That means taxes and fees are usually rolled into the loan and charged interest unless you pay them with cash.
- How much more does an out the door price add to my payment?
- In one example, financing $30,960 instead of the $28,000 sticker at 7.5% over 60 months raises the payment from about $561.06 to about $620.37, roughly $59 more a month, purely from taxes and fees.
- Why are used car loan rates higher than new car loans?
- Used cars are considered riskier collateral, so lenders charge a higher APR. On a $30,000, 60-month loan, a used rate of 10.5% costs about $3,047 more interest than a new rate of 7.0%, though the actual rates depend on your credit and the lender.
- Is dealer financing or a credit union better?
- A credit union or bank is often cheaper because dealers can mark up the rate they arrange. A two-point markup on a $30,000, 60-month loan costs about $1,735 over the loan, so getting pre-approved first lets you compare and negotiate.
- Should I get pre-approved before going to the dealership?
- Yes. Pre-approval from your own bank or credit union gives you a real rate to beat and makes you a cash buyer, so you can accept the dealer's loan only if it genuinely beats your offer.
- Is car loan interest tax deductible?
- No. Interest on a car loan for personal use is not tax deductible. Only a vehicle used for a qualifying business can deduct loan interest, based on the business-use share.
Related guides
How to Calculate a Mortgage Payment, Step by Step · 15-Year vs 30-Year Mortgage: Which Should You Choose? · How Does Loan Interest Work? · How to Calculate a Car Loan Payment