Amount financed vs out-the-door price vs total of payments: three numbers, explained
The out-the-door price is what the car costs, the amount financed is what you borrow, and the total of payments is what you will pay back. How each is worked out, with an example, and why mixing them up is costly.
A financed car deal has three big numbers, and they are easy to confuse:
| Number | What it answers |
|---|---|
| Out-the-door price | What does the car cost, with every tax, fee and add-on? |
| Amount financed | How much am I borrowing? |
| Total of payments | How much will I pay back over the whole loan? |
They are connected, but they are not the same, and a quote that talks about one when you are thinking about another can make a deal look cheaper or dearer than it is.
From out-the-door price to amount financed
The out-the-door price is the total for the car. Then:
Amount financed = out-the-door price − down payment − deposit − trade-in allowance + trade-in payoff
- Your down payment and deposit reduce what you borrow.
- Your trade-in allowance reduces it too.
- Any payoff you still owe on the trade-in is added, because the dealer pays that loan off for you.
If you owe more on your trade-in than the dealer allows for it, that shortfall ends up in the amount financed. See negative equity explained.
Some items are added at the finance stage, such as service contracts and GAP. If they were not in the out-the-door price you were quoted, they can push the amount financed up later. Check that the products in the loan are the ones on the quote.
From amount financed to total of payments
The total of payments is what you will actually pay the lender:
Total of payments = payment × number of payments (+ any final balloon payment)
The difference between the total of payments and the amount financed is the finance charge: the cost of borrowing, in dollars.
An example with made-up numbers
| Step | Amount |
|---|---|
| Out-the-door price | $29,529.00 |
| − Down payment | −$3,000.00 |
| = Amount financed | $26,529.00 |
| Payment at 6.9% APR, 72 monthly payments | $451.02 |
| Total of payments (72 × $451.02) | $32,473.44 |
| Finance charge ($32,473.44 − $26,529.00) | $5,944.44 |
Change only the loan length to 60 payments and the payment rises to $524.06, but the total of payments falls to $31,443.60. The car costs the same; the loan does not. See why a longer loan with a lower payment can cost more.
Work all three out for your own deal with the out-the-door price calculator, or compare loan lengths with the car loan calculator.
Why the difference matters
- Comparing dealers: compare out-the-door prices for the car, and totals of payments for the financing. A lower payment alone tells you neither.
- Spotting surprises: if the amount financed is higher than the out-the-door price minus what you are paying up front, something was added, and you should ask what.
- Understanding the cost of credit: the finance charge is the number to look at when weighing a longer loan or a higher APR.
In the US, a retail installment contract has to disclose the amount financed, the APR, the finance charge and the total of payments, usually in a box near the top. Use those figures.
Check it on your quote
Explain My Dealer Quote keeps all three numbers apart. It shows the out-the-door price and the amount financed, each marked as printed on the quote or calculated by us, checks the amount financed against the out-the-door price less what you are paying, works out the total of scheduled payments when the schedule is complete, and checks whether the payment matches the APR and term.
Frequently asked questions
Is the amount financed the same as the price of the car?
No. The amount financed is the out-the-door price minus your down payment, deposit and trade-in allowance, plus any payoff owed on the trade-in, plus anything added to the loan.
What is the total of payments on a car loan?
The total of payments is the payment amount multiplied by the number of payments, plus any final balloon payment. It is what you will pay the lender in total if you make every payment as scheduled.
What is a finance charge?
The finance charge is the cost of the loan in dollars: the total of payments minus the amount financed. It includes interest and some other credit charges.
Why is my amount financed higher than the out-the-door price?
Usually because negative equity from a trade-in was added, or because products such as a service contract or GAP were added to the loan. Ask the dealer to show each item that makes up the amount financed.
Which number should I compare between two dealers?
Compare out-the-door prices for the car itself, then compare the APR, number of payments and total of payments for the financing. A monthly payment on its own is not enough. See how to compare car quotes from different dealers.
Got a quote from the dealer? Upload it before you sign. Every fee and add-on explained in plain English, the dealer’s arithmetic checked line by line, five questions to ask, and your reply to the dealer drafted for you. Included with the 30-day pass.
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