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Trading in Paid off Vehicle


VanillaEps

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I am trading in a vehicle that has been paid off. I've negotiated the selling price on Spec B. The next step is to negotiate a competitive value on the trade in. I don't want to place the entire value of the trade in vehicle on the Spec B. I can use the difference to earn interest, pay off some revolving acounts, x-mas money, rainy day fund, etc. Besides, the difference in payment between placing the full trade in value and partial trade in value is negligible.

 

The trade in value of the vehicle is approximately 15k. I'd like to place 5k on the new vehicle and keep 10k in the bank. Will most dealers write me a check or will they stray away from that kind of deal? Has anyone done this type of deal? If not, I need to start formulating a contingency plan, such as Carmax or private party sale.

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Remeber about sales tax. If you trade in, the purchase price is lowered by the trade in value and you pay sales on tax on top of the difference.
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Remeber about sales tax. If you trade in, the purchase price is lowered by the trade in value and you pay sales on tax on top of the difference.

 

Since I am asking for 10k back, which would be the scenario?

 

  • (Selling price - 5K) + Tax
  • (Selling price + Tax) - 5K

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Oh really? I'm in a similar scenario... will be getting about 14-15k for my trade-in and I plan on throwing it all on a down payment. Does that mean ill only be paying sales tax on lets say $33,000 for new spec B, - $15,000... So i'll only be paying tax on $18,000 ?

 

Remeber about sales tax. If you trade in, the purchase price is lowered by the trade in value and you pay sales on tax on top of the difference.
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Oh really? I'm in a similar scenario... will be getting about 14-15k for my trade-in and I plan on throwing it all on a down payment. Does that mean ill only be paying sales tax on lets say $33,000 for new spec B, - $15,000... So i'll only be paying tax on $18,000 ?

 

Yes, that I do know.

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Tax laws vary by state but to my knowledge all states will charge tax only on the trade difference (selling price - trade value = trade difference) since they will be getting their money when the "trade" is re-sold by the dealer anyway.

 

P.S. I work at a Dealership and we have sold cars and sent the customer home with $. Yesterday an older gal traded 2006 Cadillac DTS because it was too big for a 2006 Chevy Malibu and she walked with the difference. Depending on what rebates/dealer cash/bonus bucks programs are running...certain ones can be given directly to the customer rather than applied towards the purchase so they can finance the entire amount and walk with $. This can be a good closing technique used by finance managers, here is $2,000 to payoff that credit card at 22%...only increases your car payment by $40/month...oh and by the way there is this GAAP coverage since now you'll be upside down...blah blah blah.

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Tax laws vary by state but to my knowledge all states will charge tax only on the trade difference (selling price - trade value = trade difference) since they will be getting their money when the "trade" is re-sold by the dealer anyway.

 

P.S. I work at a Dealership and we have sold cars and sent the customer home with $. Yesterday an older gal traded 2006 Cadillac DTS because it was too big for a 2006 Chevy Malibu and she walked with the difference. Depending on what rebates/dealer cash/bonus bucks programs are running...certain ones can be given directly to the customer rather than applied towards the purchase so they can finance the entire amount and walk with $. This can be a good closing technique used by finance managers, here is $2,000 to payoff that credit card at 22%...only increases your car payment by $40/month...oh and by the way there is this GAAP coverage since now you'll be upside down...blah blah blah.

 

That's good to hear. I figured they would be able to do that.

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Btw, VanillaEps...congrats on your purchase, and thumbs up for your lady for appreciating the Subie.

 

Thanks! As soon as the payoff on my current vehicle clears, I'll go to the dealer, trade in my vehicle, sign the papers, and take home Spec B #449. :icon_mrgr

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Tax laws vary by state but to my knowledge all states will charge tax only on the trade difference (selling price - trade value = trade difference) since they will be getting their money when the "trade" is re-sold by the dealer anyway.

 

This is definitely not true in California. Here, you pay the sales tax on the full price of the car regardless of how much your trade-in is. Your trade-in could be worth more than the price of the brand new car and you would still get hit with anywhere from about 7.5% to 8.75% sales tax depending on where you live in California.

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