, inside is better if everything is apart. If the engine/trans is not apart, then on the outside, that's why I said place on a rearward facing part of the oil or trans pan so it would be protected from getting knocking off if you went off road. Rare Earth magnets are STRONG. In reality, even if it got knocked off, if it had been in place for a while, the pan would still be magnetic to some extent (think magnetic screwdriver).