Negotiating on a trade-in
07-06-13, 08:58 AM
#16
Lexus Fanatic
Think about it though. If you're buying one of these cars you make a good living most likely. If you add up what your hourly rate is, you might be surprised (might be surprised either direction but thats another topic LOL), and likely have a higher stress, higher pressure professional life. Do you really want to spend your downtime dealing with this? Its the same reason I hire people to do stuff around my house instead of trying to fix it myself. There was a time when I did it myself...but that time is gone.
07-06-13, 11:06 AM
#18
Correct, the purchase price of the car is reduced by the amount they give you in trade when calculating the sales tax.
07-08-13, 06:42 AM
#19
After researching and estimating the value of my trade and sales tax benefit, I have typically traded. To me not worth the hassle factor for a few hundred dollars. However after negotiating our 300h price I had the dealer look at my wife's Volvo. The dealer offered $3,500. The offer was so insulting I almost walked on the whole deal. Carmax offered $8,000 and I sold it myself on Craigslist in under two weeks for $9,700.
If there is a Carmax in your area you can take it there and get a price good for 8 days.
If there is a Carmax in your area you can take it there and get a price good for 8 days.
07-08-13, 07:51 AM
#20
Although I agree that selling it yourself is a big hassle, the sales tax argument about reducing the sales tax due to the net price being lower from the trade in value, doesn't hold water. If you sell the car privately and get more for it, you put that money down on the car. That also reduces the net amount and the sales tax as well. So there really is no sales tax consideration. It's just a matter of your time versus the lower sales price on the trade in
07-08-13, 08:12 AM
#21
Although I agree that selling it yourself is a big hassle, the sales tax argument about reducing the sales tax due to the net price being lower from the trade in value, doesn't hold water. If you sell the car privately and get more for it, you put that money down on the car. That also reduces the net amount and the sales tax as well. So there really is no sales tax consideration. It's just a matter of your time versus the lower sales price on the trade in
The point is you have to make sure you add to your asking price any sales tax benefit if available in your state.
A $30K trade in my state is a $2100 sales tax benefit.Some sellers like the OP may not realize the sales tax trade in benefit.
One then has to determine how much can you make extra on selling on your own vs a trade in adding the sales tax trade in difference..
To me $1K-$1500 isn't worth the hassle selling a vehicle brings.Others like yourself feel differently.
"Different strokes for different folks'.
07-08-13, 08:15 AM
#22
Lexus Fanatic
Although I agree that selling it yourself is a big hassle, the sales tax argument about reducing the sales tax due to the net price being lower from the trade in value, doesn't hold water. If you sell the car privately and get more for it, you put that money down on the car. That also reduces the net amount and the sales tax as well. So there really is no sales tax consideration. It's just a matter of your time versus the lower sales price on the trade in
Thats my point, if you do all that work to sell the car yourself and only net as much more as the reduction in the sales tax would have been vs trading it in...you've gone through all that hassle for nothing...which is why I said make sure you can get enough more than that sales tax difference to make it worthwhile. Absolutely holds water.
For instance, they gave me $26k for my 2010 ES. They sold it CPO for $28.9k, it was listed there, they probably got $28k for it. So, what could I have gotten? The $26k trade reduced my sales tax on the GS by $1,560...so I would have had to get at least $27,560 private party to break even...why would I go through the hassle of selling it myself?
It all depends on the situation.
07-08-13, 01:12 PM
#23
Lead Lap
I think that your analogy is a good one SW13GS. When you also consider that there are enough fruitcakes out there to give one major grief, selling one's car themselves becomes much less attractive. I did it for years but not now. Not worth taking a chance on a nut job.
07-09-13, 05:45 AM
#24
Unless CA treats sales tax differently, sales tax is calculated on the sales price of the car, less the agreed value of the trade-in. A down payment does not reduce the base on which the sales tax is calculated. Sales tax is a consideration. If you can privately sell the vehicle at a sufficient number to cover what the dealer will give you in "real money" plus the sales tax savings, plus a sufficient amount for the hassle factor, go for it. This is what I did with my wife's Volvo mentioned in a previous post.
07-09-13, 07:01 AM
#25
Lexus Test Driver
Unless CA treats sales tax differently, sales tax is calculated on the sales price of the car, less the agreed value of the trade-in. A down payment does not reduce the base on which the sales tax is calculated. Sales tax is a consideration. If you can privately sell the vehicle at a sufficient number to cover what the dealer will give you in "real money" plus the sales tax savings, plus a sufficient amount for the hassle factor, go for it. This is what I did with my wife's Volvo mentioned in a previous post.
The most you can save is to sell your car privately and buy your car privately. Every time you involve a dealer you;ll lose money.
07-09-13, 07:04 AM
#26
I stand corrected. I didn't realize that sales tax was paid on the selling price before the down payment. I also didn't realize that a trade in was netted against the selling price to reduce the tax liability. In that case, given all the hassle and extra work associated with selling a car yourself, I see NO reason to not trade in a vehicle. Thanks for the education.
07-09-13, 07:36 AM
#27
The most important thing is to do your homework and know the value of your trade. If there is a Carmax nearby, go there first and you have an offer in hand. Two things to be careful of: first that they don't gross up the trade offer and offset it by not reducing the price of the new vehicle. You need to deal in "real money" as an old dealer used to tell me. Second, ensure that you don't get low-balled like the Lexus dealer tried to do to me.
One other idea that I have done a couple of times is to set up the private sale of the trade vehicle, and run the sale through the dealer. That way you get even more of a sales tax benefit (I had to pay a $100 doc fee but that was no big deal) as they show the trade at the agreed price to the third party. I also purchased a 94 LS from a friend through a dealer. Since he was trading his vehicle, he was willing to sell it to me through the Lexus dealer at the wholesale price they were giving him. The Lexus dealer required me to pay for a $150 inspection since the car would legally be sold by them (which I was fine with as I would have had the car checked out anyway).
One other idea that I have done a couple of times is to set up the private sale of the trade vehicle, and run the sale through the dealer. That way you get even more of a sales tax benefit (I had to pay a $100 doc fee but that was no big deal) as they show the trade at the agreed price to the third party. I also purchased a 94 LS from a friend through a dealer. Since he was trading his vehicle, he was willing to sell it to me through the Lexus dealer at the wholesale price they were giving him. The Lexus dealer required me to pay for a $150 inspection since the car would legally be sold by them (which I was fine with as I would have had the car checked out anyway).
07-09-13, 11:00 AM
#28
Lexus Fanatic
07-09-13, 11:47 AM
#29
Lead Lap
One other idea that I have done a couple of times is to set up the private sale of the trade vehicle, and run the sale through the dealer. That way you get even more of a sales tax benefit (I had to pay a $100 doc fee but that was no big deal) as they show the trade at the agreed price to the third party. I also purchased a 94 LS from a friend through a dealer. Since he was trading his vehicle, he was willing to sell it to me through the Lexus dealer at the wholesale price they were giving him. The Lexus dealer required me to pay for a $150 inspection since the car would legally be sold by them (which I was fine with as I would have had the car checked out anyway).[/QUOTE]
This is called a "courtesy trade" and most dealers are happy to do it for the sale of a new car. As previously stated, this saves money on sales tax and the seller usually can get more for the car than a dealer's wholesale offer. Of course the buyer of your used car must agree to do this at the dealer location.
This is called a "courtesy trade" and most dealers are happy to do it for the sale of a new car. As previously stated, this saves money on sales tax and the seller usually can get more for the car than a dealer's wholesale offer. Of course the buyer of your used car must agree to do this at the dealer location.
07-09-13, 03:48 PM
#30
Lexus Fanatic
Interesting idea...
