I used to do some repairable insurance sale cars and we paid the sales tax on what we paid for the cars. they changed that to the sales tax on the book value of the car, so Iowa is catching up. it won[t be long before it is like Illinois.
I would never trade in a car anyway. Private sales only. Dealers ALWAYS try to hose you on a trade.
1) Have you ever run a business? To sell a used car at a profit, you have to buy it below retail with enough margin to cover your costs and risks.I would never trade in a car anyway. Private sales only. Dealers ALWAYS try to hose you on a trade.
I must have been one of the lucky ones. I bought a new car in a different Illinois county than mine. During the transaction, I told the dealer that I was in DuPage county and the tax was higher. He knew nothing about that and ran the transaction at this local tax rate. I never received a bill from my county or the state for the extra $$. ( Shhhh. Don't tell anybody)No, I tried that.
Bought the new vehicle, paid the lower tax where the dealer was located.
Six months later I get a bill from the State for the rest of the sales tax because I was located in a higher tax rate city than the dealer.
I treat every trade in as a separate negotiation from the new car purchase. Deal on the new car purchase and then deal on the trade in. I have been known to keep a few cars until they are no longer safe or uneconomical to repair. In these cases, I am too leary of selling them to a private buyer. In recent 2 cases, I have gotten wholesale price or better on the "trade-in" that goes immediately to the wholesale auction block. I feel that I am somewhat more isolated from the eventual buyer that way. They were probably parted out by a salvage yard. I give you that this is definitely a different scenario than trading in a $10K car.I would never trade in a car anyway. Private sales only. Dealers ALWAYS try to hose you on a trade.
Tax is 6% in Michigan and it’s always been that way. You pay tax on the entire value regardless of any trade in or whatever. The only situation I’ve heard that I consider worse is in Texas where I understand that when you lease a car, you pay sales tax on the entire value of the car. In Michigan, you only pay the sales tax on the lease payment. You pay it each month as a component of the lease payment.
Yep, here in the Great State of Texas you pay the full sales tax on a lease vehicle. Dealers try to hide that cost in the "down payment" for the lease. Most ads say $XXX per month then in fine print below say "After $X,XXX down payment.
Exactly my point when I said that the trade-in decision was nuanced. I have traded a couple of cars where I did not want the next owner to know my name and address. I remember one old Volvo I got a decent trade price for then, after the deal was done, the used car manager asked "How is that car, anyway?" My answer was "It's a rat." This produced a very crestfallen used car guy and a car that was, I'm sure, immediately wholesaled.I treat every trade in as a separate negotiation from the new car purchase. Deal on the new car purchase and then deal on the trade in. I have been known to keep a few cars until they are no longer safe or uneconomical to repair. In these cases, I am too leary of selling them to a private buyer. In recent 2 cases, I have gotten wholesale price or better on the "trade-in" that goes immediately to the wholesale auction block. I feel that I am somewhat more isolated from the eventual buyer that way. They were probably parted out by a salvage yard. I give you that this is definitely a different scenario than trading in a $10K car.
Two rules for living in Texas:
1. Don't squat with your spurs on.
2. Don't lease a vehicle - or transfer one leased out of state.
My BIL was really miffed a few years ago when he moved to TX from Ohio and when he registered his car in state was hit with a bill for $1,500 in taxes. He was in the middle of a 3 year lease and had to pay sales tax (6.25%) on the full price of the car at the time he signed the lease, less a credit for the tax he'd already paid each month.
So let me get this right: If I live in another state (say, SC where I grew up) and bought a car 2-3 years ago paying the State tax required there (max of $300 due to the annual property tax costs for having a vehicle), and then I move to Tx, they will go back to the original purchase price and want to charge me Tx state tax for that purchase??
Computation of Motor Vehicle Sales Tax
1. Texas Sales Tax is 6 1/4% of the sales price or 80% of the SPV (Standard Presumptive Value) , whichever is greater
2. The price you paid or consideration given for the vehicle
3. Amount of tax paid to another STATE (local taxes included are not considered for credit purposes) (include a copy of your PAID Tax Receipt IN YOUR NAME for this amount)
4. The Amount you owe is the difference between the amount in #4 and the amount of STATE ONLY tax previously paid in another state. If this figure is -0- (ZERO) or less you owe no tax
Exactly how my lease is - not MI.Tax is 6% in Michigan and it’s always been that way. You pay tax on the entire value regardless of any trade in or whatever. The only situation I’ve heard that I consider worse is in Texas where I understand that when you lease a car, you pay sales tax on the entire value of the car. In Michigan, you only pay the sales tax on the lease payment. You pay it each month as a component of the lease payment.
I always give them to young relatives or St. Vincent dePaul.I always sell my cars.
Have you ever received a fair trade-in offer on your used car, that didn't come with a) a high finance % rate, or b) a new vehicle purchase price that was at or above MRSP?1) Have you ever run a business? To sell a used car at a profit, you have to buy it below retail with enough margin to cover your costs and risks.
2) Statements that use a naked "never" or "always" are almost always false.
3) Selling or trading a used car is much more nuanced than your simple statement comprehends.
If this is true, it must be fairly recent. I don't recall paying any such tax when I moved to TX in 2001 and registered a car I bought in NC 4 years earlier.So let me get this right: If I live in another state (say, SC where I grew up) and bought a car 2-3 years ago paying the State tax required there (max of $300 due to the annual property tax costs for having a vehicle), and then I move to Tx, they will go back to the original purchase price and want to charge me Tx state tax for that purchase??
So let me get this right: If I live in another state (say, SC where I grew up) and bought a car 2-3 years ago paying the State tax required there (max of $300 due to the annual property tax costs for having a vehicle), and then I move to Tx, they will go back to the original purchase price and want to charge me Tx state tax for that purchase??
If this is true, it must be fairly recent. I don't recall paying any such tax when I moved to TX in 2001 and registered a car I bought in NC 4 years earlier.
Someone may want to clarify. The thread went from this happening when you lease and drifted to when you own a car outright. I’m not sure but I don’t think it applies to when you own a car, but it might.
Well, start with "What is "fair?" AFIK there are no line judges in tall chairs calling "fair" or "unfair." A deal happens only when the deal acceptably meets the needs of the seller and acceptably meets the needs of the buyer. I don't know how "fair" figures into that.Have you ever received a fair trade-in offer on your used car, that didn't come with a) a high finance % rate, or b) a new vehicle purchase price that was at or above MRSP?
With respect, I think you do not understand business. Also, it sounds like you have a lot of ego involved when negotiating. As a negotiator I kind of like this because I can feed the ego to get the deal rather than giving up so much on price. I will weep and wail and tell you what a tough negotiator you are. I will leave the room, supposedly to talk to my sales manager, have a coffee, and return with a sad story of suffering. I will seat you at the head of the conference table so you feel powerful. I will do lots of things that cost me nothing and lead to what the behavioral economists call "transaction utility" -- the pleasure you feel when you think you are getting a deal. So ... be careful out there!My last couple of attempts at trading in resulted in low Blue Book offers. The last time, I negotiated the purchase price first, then after reviewing the offered trade-in value, laughed, and told them they weren't getting my trade-in.
Wow. That’s pretty darn aggressive. Of course, one needs to consider the entire tax burden and I think Texas still does well on that measure but from just looking at a vehicle, that’s a bit much. Thanks for the confirmation.
Good thing state income taxes aren't money grabs.Yes, to me, it's a money grab, pure and simple.