Question 1

How do you calculate the Out-the-Door (OTD) car price by state?

Accepted Answer

Your Out-the-Door (OTD) car price equals the negotiated vehicle price minus any manufacturer rebates, plus state and local auto sales tax (reduced by trade-in value in states that allow trade-in tax credits), plus DMV title/registration fees and dealer documentation fees.

Question 2

Which states allow a trade-in sales tax credit on a car purchase?

Accepted Answer

Over 40 US states (including Texas, Florida, New York, and Georgia) deduct your trade-in allowance from the new vehicle's purchase price before calculating auto sales tax. States like California, Virginia, and Hawaii tax the full purchase price without a trade-in tax reduction.

Question 3

What is the 20/4/10 rule for buying a car?

Accepted Answer

The 20/4/10 auto affordability rule recommends putting at least 20% down, financing the vehicle for no more than 4 years (48 months), and keeping total monthly car expenses (loan payment plus auto insurance) under 10% of your gross monthly income.

Montana (MT) Auto Loan & Out-the-Door Calculator