a question about tax...
 

say you can buy the car for msrp and it comes to 25,000 exactly. your state tax is 8% which comes to 2000 in tax. does that mean you actually end up paying 27,000? this car really becomes a little less attractive at 27,000 out of pocket. am i thinking about this correctly or does tax work differently on cars?

That's correct, but it some states, you can offset the trade-in value of your old car. So, if your trade-in is worth $10,000, then you're paying tax on only $15,000 of the new car. Somewhere there is a thread that says which states do that.

25000
+ dealer fees say 500
so 25500 x.08 so 2040 in tax

my dealership has msrp listed as 24,200 and destination listed as 730. so 24,930 should be the total cost of the car.

it would be nice if the tax only applied to what you are financing, does anyone know what states that applies to?

does that count towards your down payment as well or only what your trade in is worth? say my trade in is 10,000 and i put 5,000 down on top. do i only pay tax on the 10,000 i would finance?

what states is this how its done?

Any $25K car you purchase is going to have the same tax on it, so I'm not sure I understand your point. If you are looking for an OTD price of $25K then you have to start looking at $20K cars.

Considering sales tax is on everything you buy, this shouldn't be a surprise...

But as above, in many states you can reduce or eliminate your tax if you're trading in a car.

how can i find out what states give you a break when you trade in?

No, just the trade-in. Look for your state in the chart:

http://www.edmunds.com/car-buying/wh...d-you-pay.html

Thanks for posting that. Many people don't know about the tax/trade-in. In my case, it made a big enough difference that it made no sense to try and sell the car private party, and a dealer trade in made more sense.

The chart is a little out of date as I know in my state (Minnesota) the dealer doc fee is higher than $50 now (I believe it is $79). I wish all states put a cap on how much these dealers can charge for doc fees. Some dealers are getting away with $500-800 in doc fee charges which is a total joke.

ok luckily my state is listed as discounting the tax from the trade in. my car is kelly blue book at around 13k now, so say i wait another year to purchase i'd say 10k from the dealer is a safe estimate. (i have 1 small door ding, and the paint on the roof has some oxidization) not sure how much that effects it.

so say i get 10k in trade in, i'll only be taxed on 15,000. which at 8% is 1200. not too bad. so out the door i should be expecting to pay 26,200. correct?

There are usually registration fees, and also dealers will sometimes charge you a doc fee. When you negotiate on a car, always ask for the out the door price. Not just the price of the car. Some dealers are shady and have some pretty hefty fees they don't disclose until you are doing the paperwork.

Yeah but you just lost $3k on the trade in. It's all relative! From the sounds of it your new to the whole buying cars thing, I would suggest to bring along someone you trust with experience at dealers. Getting information from us all is a good start.

yes, this is my 2nd car purchase. i don't feel like i got the best deal i could have with my first one, want to make sure i go in knowing what to expect. tax is a big additional cost to consider.