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I'm looking to buy a new car and would like to trade in my existing car.

Is tax calculated before or after the trade in amount? my guess is before but just wanted to confirm.

ie before
price of car 30,000
tax (8%) 2,400
trade-in -10,000
net 22,400

ie after
price of car 30,000
trade-in -10,000
tax (8%) 1,600
net 21,600

Different state has different requirement. CA charges full tax on your new car, it doesn't matter what is your trade in worth.

<< Different state has different requirement. CA charges full tax on your new car, it doesn't matter what is your trade in worth.>>

Ditto in MD

Check with your state - in TX, last time I bought a new car (a few years ago) they calculated the sales tax on the net price after taking the trade-in off. So that was an extra 6% in my pocket.

In my state the trade is deducted and then tax is paid on the balance owed.

A friend of mines is doing the same thing. But, she has 2 cars she wants to trade in. Is it possible to trade in 2 cars for a new car? But, the bad thing is that both are not paid off (98 sebring, owes 2500) and 2001 ford focus owes a whooping 9000. They both have a blue book value of 2000-3000. Anyone had any experience on trading in 2 cars? She just doesn't want to have to pay off 2 cars and trying to consolidate them into one new car.

LittleNicky said: [Q]A friend of mines is doing the same thing. But, she has 2 cars she wants to trade in. Is it possible to trade in 2 cars for a new car? But, the bad thing is that both are not paid off (98 sebring, owes 2500) and 2001 ford focus owes a whooping 9000. They both have a blue book value of 2000-3000. Anyone had any experience on trading in 2 cars? She just doesn't want to have to pay off 2 cars and trying to consolidate them into one new car.


sounds like a great idea:
negative equity on 2 cars --> let's go buy a third car and add the negative equity from the other 2 in the purchase

congrats!

tgif777 said: [Q]Different state has different requirement. CA charges full tax on your new car, it doesn't matter what is your trade in worth.

I'm in CA so I guess I will need to negotiate a lil more on the new car price vs trade-in price to minimize taxes.

thanks

LittleNicky said: [Q]2001 ford focus owes a whooping 9000.dang. owing 9k on a 2001 car of any non-luxury make is pretty bad, but 9k on a 3.5-4 year old focus?

AAlison said: [Q]Check with your state - in TX, last time I bought a new car (a few years ago) they calculated the sales tax on the net price after taking the trade-in off. So that was an extra 6% in my pocket.

TX is net of trade. But I don't see how you put 6% IN your pocket. You just paid OUT less.

FL calculates tax on the difference between the sale price and the trade in price.

In Missouri, you pay on the net difference. You also do not pay tax on rebate amounts, from the dealer or the GM Card.So a $30,000 car with a 15,000 trade in, and 4000 Manufacturer rebate, and a 2000 GM rebate from your GM Card would have you pay tax on $9000.

Other states may and probably do vary.

MazdaMP said: [Q]LittleNicky said: [Q]A friend of mines is doing the same thing. But, she has 2 cars she wants to trade in. Is it possible to trade in 2 cars for a new car? But, the bad thing is that both are not paid off (98 sebring, owes 2500) and 2001 ford focus owes a whooping 9000. They both have a blue book value of 2000-3000. Anyone had any experience on trading in 2 cars? She just doesn't want to have to pay off 2 cars and trying to consolidate them into one new car.sounds like a great idea:
negative equity on 2 cars --> let's go buy a third car and add the negative equity from the other 2 in the purchase

congrats!Trading two cars? Of course you can do it! And rolling "negative equity" (what a term!) into the deal? Of course a dealer will do this for you too!

Look at it this way though. Say she wants to buy a $20,000 car for cash and has no trade in. Dealer says, "Okay, but I am going to charge you $26,500 for this $20,000 car." Bad deal, right?

Now suppose she shows up with her two heaps to buy the same $20,000 car. The heaps are worth $5,000 combined, but she owes $11,500. Dealer loans her $26,500 and she drives away in the $20,000 car. Now how is this a better deal than the first scenario?

What will actually happen is that she will buy a car with an MSRP of $26,500 and think that she got a great deal because she paid asking price for the car and got rid of the other two loans. The difference is that the next buyer in the door could buy that same MSRP $26,500 car with a $5,000 rebate and another negotiated $1,500 discount and get out the door for $20,000.

A friend of mines is doing the same thing. But, she has 2 cars she wants to trade in. Is it possible to trade in 2 cars for a new car? But, the bad thing is that both are not paid off (98 sebring, owes 2500) and 2001 ford focus owes a whooping 9000. They both have a blue book value of 2000-3000. Anyone had any experience on trading in 2 cars? She just doesn't want to have to pay off 2 cars and trying to consolidate them into one new car.

How did she manage to owe $9K on a 2001 Focus that she probably got for less than $15K? She would owe about half of that if it was through any auto finance loan.

What is she hoping to buy ?
I hear the GM hummer has some of the hottest depreciation going.

She is likely a poor credit risk, and ended up with an exorbitant interest rate, keeping her paying interest off instead of principal this long.

jlrdallas said: [Q]AAlison said: [Q]Check with your state - in TX, last time I bought a new car (a few years ago) they calculated the sales tax on the net price after taking the trade-in off. So that was an extra 6% in my pocket.

TX is net of trade. But I don't see how you put 6% IN your pocket. You just paid OUT less.

Exactly. I paid out less, leaving the extra 6% still in my pocket.

Maybe it's a Focus with $20k worth of bling financed in. Notice I said bling, not bling bling because I don't think there is such a thing as a Focus with bling bling.

juniorjam said: [Q]Maybe it's a Focus with $20k worth of bling financed in. Notice I said bling, not bling bling because I don't think there is such a thing as a Focus with bling bling. Actually I think they discuss this exact topic on the Big Tymers album....

MazdaMP said: [Q]sounds like a great idea:
negative equity on 2 cars --> let's go buy a third car and add the negative equity from the other 2 in the purchase
congrats!

Imagine 6 years down the road, after two more negative-equity purchases, and ending up with at $15K car and owing $40K on it.

"America is a great country. I came here without a nickel in my pocket, and now I owe fifty thousand dollars."

StevenColorado said: [Q]"America is a great country. I came here without a nickel in my pocket, and now I owe fifty thousand dollars."

Go bk and u owe nuthing. <img src="i/expressions/face-icon-small-smile.gif" border=0>



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