RE: Price Check

["mikeandcarmen@pdq.net" <mikeandcarmen@pdq.net>]

One of the factors to consider when trading your car in is the tax benefit of 
trading it in vs. selling it outright.  I'm not sure if this is the case in 
other states, but in Texas, you are not taxed on the portion of a car's 
purchase price that is covered by your trade-in.  The following is a 
simplified example:

The purchase price of the car you are buying is $20,000.00.
The dealership is offering you $7,000.00 for your trade-in.
You owe $2,000.00 on the car you are trading in.
Therefore, $5,000.00 would be applied toward the purchase price of the car you 
are buying.
If you trade your car in, you would only be taxed on $15,000.00 instead of 
$20,000.00.

Sales tax on vehicle purchases in Texas (new or used) is 6.25%.  Therefore, by 
accepting the dealer's trade-in offer, the sales tax would be $937.50 instead 
of $1,250.00.

Like I said earlier, I know that this is applicable in Texas, but I'm not sure 
how it works in other states.  I would suggest that you get your car appraised 
for trade-in, & add the tax benefit of the trade-in (if any) to the trade-in 
value.  If you are able to sell your car for more than that, you are better 
off selling it yourself.

The reason that I suggest having your car appraised vs. simply calculating the 
tax benefit using a published wholesale value is that often, in order to sell 
you a car, the dealership will give you more than wholesale on your trade 
while still giving you a decent price on the car you are buying.  They do this 
because they know that they can usually make up the difference on their used 
car lot.

Good luck!

Michael Keith
Pasadena, TX
'98 Jetta GLX
'85 Golf SCCA ITB
>===== Original Message From David Hughes <jettaglx@igtc.com> =====
>Does it make any difference if the car is all paid off?
>
>
>*=*=*=*=*=*=*=*=*=*=*=*
>David C. L. Hughes
>18 Morelos Avenue #578
>Forest Knolls, CA 94933
>Pgr: (415) 838-0175
>*=*=*=*=*=*=*=*=*=*=*=*
>
>> -----Original Message-----
>> From: owner-jettaglx@igtc.com [mailto:owner-jettaglx@igtc.com]On Behalf
>> Of Talitmon@aol.com
>> Sent: Wednesday, May 19, 1999 7:22 AM
>> To: jettaglx@igtc.com
>> Subject: Re: Price Check
>>
>>
>> My opinion would be to sell the car privately,
>> then purchase the new car.
>> Dealers will take full advantage with disregard
>> of your situation.
>> Also depends on the balance of the loan
>> versus the bluebook of the auto...Dealer
>> will always give you low/wholesale value,
>> and if they do give you a higher value
>> they will add it on to the new car you are
>> going to buy, thus raising the actual value
>> of your new car beyond the high/retail
>> value according to Kelley Bluebook.
>> So when you go to sell the new car later,
>> you will run into problems with loan
>> balance/value, thus creating an even more
>> vicious cycle to the advantage of a dealer.
>>
>> Later.........
>> Talat
>> 97 GLX
>>
>>