diff --git a/dvc/dependency/repo.py b/dvc/dependency/repo.py
index 91959caa9f..5bb6d98313 100644
--- a/dvc/dependency/repo.py
+++ b/dvc/dependency/repo.py
@@ -83,6 +83,7 @@ def _make_fs(
             url=self.def_repo[self.PARAM_URL],
             rev=rev or self._get_rev(locked=locked),
             subrepos=True,
+            config={"cache": {"dir": self.repo.cache.local.path}},
         )
 
     def _get_rev(self, locked: bool = True):
diff --git a/dvc/repo/open_repo.py b/dvc/repo/open_repo.py
index b7ce7a7982..f2237a9c6a 100644
--- a/dvc/repo/open_repo.py
+++ b/dvc/repo/open_repo.py
@@ -68,6 +68,9 @@ def open_repo(url, *args, **kwargs):
 
     if os.path.exists(url):
         try:
+            config = _get_remote_config(url)
+            config.update(kwargs.get("config") or {})
+            kwargs["config"] = config
             return Repo(url, *args, **kwargs)
         except NotDvcRepoError:
             pass  # fallthrough to _external_repo
diff --git a/tests/unit/stage/test_stage.py b/tests/unit/stage/test_stage.py
index 739527ae95..bec4a5a546 100644
--- a/tests/unit/stage/test_stage.py
+++ b/tests/unit/stage/test_stage.py
@@ -56,7 +56,8 @@ def test_path_conversion(dvc):
 
 
 def test_stage_update(dvc, mocker):
-    dep = RepoDependency({"url": "example.com"}, None, "dep_path")
+    stage = Stage(dvc, "path", "cmd")
+    dep = RepoDependency({"url": "example.com"}, stage, "dep_path")
     mocker.patch.object(dep, "update", return_value=None)
 
     stage = Stage(dvc, "path", deps=[dep])