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Old 09-28-2016, 02:41 PM   #41
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You don't avoid sales tax by buying from a private party. When you buy from a dealer you pay sales tax when they do the registration papers. If you buy from a private party you pay sales tax when you register it.

I've never lived anywhere where it was different from that and you could avoid the sales tax.
This is not "avoiding" the sales tax, but in some states if you trade in a car to the dealership, when buying a car from that dealership, you get taxed on the "net" purchase price, which saves some taxes.

Someone might respond that you will get a better price selling your car privately rather than trading it in. And that may be right. But the tax savings, in those states that allow for "net" taxation, is a benefit to the trade-in approach (as is the reduced hassle).
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Old 09-28-2016, 03:06 PM   #42
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Wow. I'm so glad we are FI.

One of our cars we ordered so we could pick out exactly what we wanted. The bonus was picking it up at the factory and racingdriving it safely it around Europe before shipping it home.

The other we bought off the lot because it was only offered in a few packages and that was fine.

FI means we can get what we want.
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Old 09-28-2016, 03:13 PM   #43
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This is not "avoiding" the sales tax, but in some states if you trade in a car to the dealership, when buying a car from that dealership, you get taxed on the "net" purchase price, which saves some taxes.

Someone might respond that you will get a better price selling your car privately rather than trading it in. And that may be right. But the tax savings, in those states that allow for "net" taxation, is a benefit to the trade-in approach (as is the reduced hassle).
medved, you need to follow the thread. My response was to a post #32 that suggested that a benefit of buying a car from a private party is that you don't have to pay sales tax. My response was that in most states that is not the case because you either pay sales tax to the dealer or when you register the car. At least in our state, in both cases it is net or trade in or if you sold the car in the past 90 days (or if you sell it in the next 90 days you can get a refund of any sales taxes paid). So whether you trade a car in with the dealer or buy it outright and sell your trade privately, in all cases you are taxed on the net purchase.

Interestingly, Arizona assessed tax if you buy a car from a dealer but not if you buy from a private party according to post #39.
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Old 09-28-2016, 03:24 PM   #44
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Old 09-28-2016, 03:58 PM   #45
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I've never bought a brand new car, nor will I ever. I buy 2-4 year, one owners with known service history. I do all my own maintenance, oil changes, brakes, etc. I either keep them until they are worth nothing, or sell them before they hit that "second hump" on the depreciation curve, usually 100k miles or less and maybe 5-7 years old. My goal is $1500/yr in depreciation or less, I have done it with couple Camrys and get pretty close with VWs.
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Old 09-28-2016, 04:01 PM   #46
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Wow - thanks for all the responses. A lot to consider. Putting money aside, I guess my pleasure would be to change out cars more often than not. I'm thinking like buying new and driving to 100K - 150K. Say 6 years or so. However, the factor I'm most concerned about is money and retirement. In order for me to retire early, I need to be very tight with my money. Not Mr. Money tight, but certainly not a new car every couple years. That's partly why the cost accountant in me keeps coming back to a cost per mile. But I do understand that with retirement and the change in driving (mileage) the formula changes.
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Old 09-28-2016, 05:00 PM   #47
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However, the factor I'm most concerned about is money and retirement. In order for me to retire early, I need to be very tight with my money. But I do understand that with retirement and the change in driving (mileage) the formula changes.
I too have often thought in terms of cost per mile. We own three used cars (2 in HI and one in the midwest.) Total miles per year is probably 13,000 on average. On that basis, our per mile cost (of ownership/with non-routine repairs) is probably higher than if we could just own one new or fairly new car. It's mostly in the denominator for us.

To keep depreciation low, we have gone with a much different "sweet spot". We typically buy 7 to 12 year old cars with "relatively" low mileage (last one was a 12 year old Buick with 60K miles.) In all 3 cars, we have "invested" less than $20K (about the cost of a really small new car today). True, we have had a number of repairs (struts on one, a computer chip in the Buick, fuel pump on another, etc.) Thinking in terms of monthly payments (lease or buy) we figure we are still way ahead. Depreciation wise, it's very low - maybe $1000/year each until they reach about $2000 value. Any well running, not too beat up car with less than 150K miles can fetch almost $2K on a good day - on the open market.

The biggest issue is reliability. Indeed we have had some issues with that. We take the (less than $3/mo) rider for towing on our insurance and have come out ahead on it. Now that we are ERd, we figure we can trade some "down" time for the savings in overall costs. There is a certain amount of "luck" involved as well. So far, we've been average on luck, I think.

Clearly, if cost for transportation is a big issue, having fewer cars is probably as important as new vs used. We could save a lot (insurance, tags) just by ditching one car. But, we like the flexibility (two used cars means at least one is always working, heh, heh.) Of course, we could use THE BUS and get rid of both cars, but, fuggiddaboudit!

So it's all a bit of a crap shoot, but we think the older cars serve our needs almost as well at a significantly lower cost per mile. We do give up a lot of the new tech, but honestly, I do NOT want an "Infotainment" package. I could live with crank windows, but all our current used cars have electric, which by the way, can be a significant source of repairs.

If I make a quick calc. of 100K miles driven on our 3 used cars and figure them all at $2K current value and throw in about $5000 for all repairs/replacements so far, I get about $.20 per mile. (I've excluded things like brake jobs/tires as even "new" cars will need those if kept for 30K to 60K or so.) That's a little better than a "new" car, but we have 3 cars - not one. So, pay your money and take your choice. I think our way is less expensive and yet more flexible, but I would not criticize anyone else's choice. And as always, YMMV.
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Old 09-28-2016, 06:25 PM   #48
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We went with a 7 year old minivan that had slightly above average miles (112k) for $8200. We also drive very little, so didn't mind the higher mileage to start with. It's a toyota, so should still run pretty well in 10 years and we still won't have 200k miles on it, so might be able to sell it for several thousand dollars.

I picked seven years because that seemed to be the inflection point between depreciating by a couple thousand $ per year to around $1000 per year. We paid about a third of the brand new price and I'm pretty sure closer to 2/3 the useful life of the vehicle remains.
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Old 09-28-2016, 06:43 PM   #49
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You did well. I believe that van has a Camry engine in it.
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Old 09-28-2016, 08:24 PM   #50
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medved, you need to follow the thread.
Actually I don't need to follow the thread; doing that is optional.

Quote:
Originally Posted by pb4uski View Post
My response was to a post #32 that suggested that a benefit of buying a car from a private party is that you don't have to pay sales tax. My response was that in most states that is not the case because you either pay sales tax to the dealer or when you register the car. At least in our state, in both cases it is net or trade in or if you sold the car in the past 90 days (or if you sell it in the next 90 days you can get a refund of any sales taxes paid). So whether you trade a car in with the dealer or buy it outright and sell your trade privately, in all cases you are taxed on the net purchase.

Interestingly, Arizona assessed tax if you buy a car from a dealer but not if you buy from a private party according to post #39.
My point is that when one compares buying a car from a private party to buying a car from a dealer, one consideration -- in SOME states -- is that if you buy a car from a private party, you will pay tax on the full purchase price, when you go to register that car, whereas if you buy a car from a dealer, and trade your old car into that dealer, you will pay tax only on the "net" purchase price (that is, the price of the new car less the value given for the trade). This is not the case in every state. And there may be countervailing considerations that suggest it is better to buy privately. But in at least some states, it is a potentially relevant consideration.
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Old 09-28-2016, 08:58 PM   #51
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Actually I don't need to follow the thread; doing that is optional.



My point is that when one compares buying a car from a private party to buying a car from a dealer, one consideration -- in SOME states -- is that if you buy a car from a private party, you will pay tax on the full purchase price, when you go to register that car, whereas if you buy a car from a dealer, and trade your old car into that dealer, you will pay tax only on the "net" purchase price (that is, the price of the new car less the value given for the trade). This is not the case in every state. And there may be countervailing considerations that suggest it is better to buy privately. But in at least some states, it is a potentially relevant consideration.
I agree that if one is in a state that does not allow a credit against the tax on the replacement car for a car that you sold rather than traded that it would be a consideration... I'm not sure how many states to that... it seems a bot onerous but the auto dealers are politically powerful and I can se it would be in their interest to have such a process.
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Old 09-28-2016, 09:31 PM   #52
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You did well. I believe that van has a Camry engine in it.
I like to think so. Very clean inside and under the hood. My independent toyota/honda mechanic said these years of Toyota siennas hold up well (and he recommended the toyota over the honda due to better transmissions). We took it on a 2400 mile road trip this summer with zero problems (well, a piece of plastic came slightly loose and it's still hanging there - probably missing a bolt or something).
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Old 09-28-2016, 11:03 PM   #53
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We've had similar experiences and conclusions to others in this thread. Subarus in our local area are usually too expensive to buy used. It makes more sense to buy new than to pay almost the same price for a car with 25K miles. For other reliable models, ~ 2 years old with one year under warranty left has worked out well.
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Old 09-28-2016, 11:56 PM   #54
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We went with a 7 year old minivan that had slightly above average miles (112k) for $8200. We also drive very little, so didn't mind the higher mileage to start with. It's a toyota, so should still run pretty well in 10 years and we still won't have 200k miles on it, so might be able to sell it for several thousand dollars.

.....
Check the oil line, some of these older toyota vans have a tiny rubber pipe that joins 2 metal pipes which carries oil.

The rubber on the original one will rot away in a number of years and suddenly you can be driving a vehicle without oil.

My buddy told me about this, as it happened to him.
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Old 09-29-2016, 12:01 AM   #55
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..... Not Mr. Money tight, but certainly not a new car every couple years. That's partly why the cost accountant in me keeps coming back to a cost per mile. But I do understand that with retirement and the change in driving (mileage) the formula changes.
I always think of my cars in cost per year. Mostly because if I don't drive them the cost is still there.

So if I drive say 12K - 15K per year, it could/should last me 10 years, which if I paid 30K for it, means it costs 3K/yr.

Now that I drive 5K per year, it should last 20 yrs, so it costs 1.5K/yr.

My previous car cost 1.1K / yr, but I feel richer now, so I upgraded
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Old 09-29-2016, 07:13 AM   #56
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... I liked driving new cars and having virtually no repairs. ... now I'm moving into retirement ...
You're retired now. Time to reward yourself with a new one!
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