A: “Even though it’s a great question, there aren’t many tricks that I can share with you. There is, however, something that many consumers don’t know but can take advantage of. Many consumers do not realize that states often offer a tax credit when they trade in vehicle. For example, if you purchased a $10,000 vehicle in a state with a 6% sales tax and you did NOT have a trade-in, the sales tax would be $600 ($10,000 x 6%).
If the state allowed for a tax credit for trade-in’s AND you traded in a used vehicle worth $5,000 against this $10,000 vehicle, your tax liability would be calculated like this:
$10,000 Price of new vehicle
– $5,000 Value of trade-in
= $5,000 Price used to calculate sales tax
The 6% tax would then be calculated on the $5,000 and NOT the full $10,000! This means you would pay $300 in tax instead of paying $600. A savings for you of 50%!
It’s particularly important to consider the sales tax credit if you are thinking of selling your car privately. In the above example, you would have had to sell your vehicle for more money just to “break even.” If you factor in the expense of advertising the vehicle and the value of your own time, your break even point becomes even higher. The lesson to be learned? Don’t lose money by selling it yourself. By trading the vehicle in, you can avoid the hassle of selling it yourself AND you could pay less tax… a real “win-win” situation if ever there was one!
Wondering what YOUR trade-in is really worth? Check out our 100% FREE online trade evaluation! As always, you have nothing to lose and lots to gain!
ABOUT THE AUTHOR – Tracy Myers has spent the past 15+ years trying to change the landscape of the car business and the bruised reputation of car salespeople all over the country. He is the owner of Frank Myers Auto Maxx in Winston-Salem, NC. He is a Certified Master Dealer, the National Quality Dealer of the Year, one of top 28 dealerships in the Nation, and one of the top 3 dealerships to work for in the United States. He is the author of “Eight Keys to a Better Car Deal” and the best selling book “Car Buying Secrets Exposed – The Dirty Little Secrets of a Used Car Dealer”, available at Amazon.com. Tracy is a Christian business owner whose goal is to run his business “By The Book.” Contact the Author: email@example.com
*portions of this blog post was taken from Galves Auto Price List blog.