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Old 05-22-2011, 08:23 AM
 
4,153 posts, read 5,999,320 times
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And I'm half way retarded I guess but hear me out.


I went to trade in my car and was going to get 1k less than what I owe. I owed 14.1k and was going to get 13k from them and putting 1k down. But things weren't working out and I asked if it would be easier to sell my car. I had someone that wanted it and was going to pay me 14k for it. But the loan guy got on the calculator and said aloud, fourteen thousand times 8.25%. No it wouldn't be better because you would come out ahead a little over $100 after taxes. I guess he was looking at the numbers he had on the trade in plus the new car numbers.

I don't understand how getting enough to pay the car off by private party over trading it in and being 1k upside down isn't better. But can someone explain what they meant by the taxes. I thought you pay taxes if your the buyer when you go to the tax office for the plates. It's not like it was paid off and I was going to put 14k down which would have lowered the price of the new vehicle thus lowering my state sales tax. I was going in upside down increasing my sales price before putting anything down, no?
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Old 05-22-2011, 08:34 AM
 
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Now would be a good time to renegotiate the whole deal, car dealers, car salesman, and loan officers are pretty much con artist doing whatever to part you with as much of your money as they can so as to put as much money in there pockets as possible. Play rough and negotiate tough, one of the leasons I learned from my father, It'll save you 1,000's of dollars then by the time you go to trade next time ya'll be no where close to upside down.
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Old 05-22-2011, 08:39 AM
 
1,021 posts, read 1,070,638 times
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Have you read, confession's of a car salesman, it's a good read, Google it, read it then, then answer your own questions. Hope that helped
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Old 05-22-2011, 08:41 AM
 
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I'm selling it and saving up for with a big down payment, but going elsewhere and using my own bank. They struck me as a bad place. The guy asked if I could bring 4-5k as a down payment and I said no. He said you can use a credit card. I laughed and said hell no, I just got through paying most of them off. And replied, well you know you have room now. I laughed and said that's stupid.
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Old 05-22-2011, 09:13 AM
 
Location: East of Seattle, originally from SF Bay Area
14,777 posts, read 18,084,357 times
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You will always get more selling a car yourself than trading it in. It's the convenience of the trade that may make it worth doing, if you have the time
and are careful then sell it first. For that amount, you want to make sure that you have either cash or a real cashier's check and cash it at the bank before turning over the keys.
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Old 05-22-2011, 09:15 AM
 
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Thanks but I know that. I was asking about the tax situation.
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Old 05-22-2011, 09:20 AM
 
Location: Purgatory (A.K.A. Dallas, Texas)
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Quote:
Originally Posted by danieloneil01 View Post
But can someone explain what they meant by the taxes.

Some states give a credit to people on the taxes when trading in a car. The trade-in value of the old car is deducted from the purchase price of the new car before taxes are assessed.

For instance, if the trade in value of the old car is $5,000 and the purchase price of the new car is $15,000, when they go to figure taxes for the new car deal, they will only charge taxes on $10,000.

Sometimes it's a significant savings. In your case, it's break-even. If you are going to get $14K from a private seller, the trade-in plus the tax credit equals $14.072.50, assuming your new vehicle tax rate is 8.25%.

It's helpful for people trading in if the trade-in value and private purchase value are relatively close.


What state are you in?
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Old 05-22-2011, 09:22 AM
 
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Texas

And thanks for the explanation. I get it now.
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Old 05-22-2011, 09:28 AM
 
Location: Purgatory (A.K.A. Dallas, Texas)
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Then if he said 8.25%, he is lying. Vehicle sales tax in Texas is 6.25%.

Your tax savings would be $812.50.

In Texas, you don't pay the taxes yourself when you go through a dealer. The dealer does it all for you and the plates get mailed to the dealer.

You have to ask yourself if making an additional $187.50 on the car is worth the hassle of selling it yourself. It's going to be a big headache because you have a lien on the vehicle, so you will personally have to make sure it's cleared off and take care of all that.

If you trade it in, they do it all for you.

Personally, I would happily take $187 less for someone else to do all the tax and registration work and take care of paying off the old car, etc.

But do it somewhere else, where the guy isn't lying to you.
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Old 05-22-2011, 10:14 AM
 
8,685 posts, read 12,474,980 times
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How about keeping the car and paying it off, then saving enough to get a new car then buying a better used car instead.
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