SonnySoMoney

Hey guys! I just got word this week that my TL is in! This came as a surprise to me as I was expecting to wait a couple more weeks. I haven't yet sold my old car which has made this week pretty hectic so far. I have two buyers at the ready which is what brings me to my question. My dealer had informed me that when you trade in a vehicle you do not have to pay sales tax on the total price of the new car. Instead, you pay sales tax on the difference of the new car minus the trade in. I know that this is a legal practice. However, my dealer is only offering $12000 for my 97 M3, whereas I have a buyer that is offereing me $14,500. What my dealer has offered is to do the paper work for the selling of my car for a fee of $100. He assures me this will have no extra cost for the purchaser, nor any requirement for them to finance through the dealership. What it will do is enable me to save sales tax for $14,500 (which amounts to 1,087.50). Does this sound legal? I wonder if this is ok...it doesn't seem to me that anyone really loses out (other than maybe the state) and I seem to be the only one really gaining (except for the $100 for the dealer) What do you guys think? BTW, ABP/Quartz Nav 6MT $32,300

kosh2258

I've done this too and it's legal so long as the title flows from you to the dealer to the buyer. But I've never been charged for it, they've done it as a customer courtesy. Since they don't have to worry about carrying the trade in in inventory it's really a minimal cost to them.
The $100 bucks is a rip to the extent that it won't cost the dealer anywhere near $100 to process the paperwork for this. So they're making a few bucks "commission" on it.

In order to break even you'd have to be selling your car outright for the trade in allowance plus the difference in sales tax between buying the TL outright or doing a trade in. So you're ahead of the game.

caball88

it benefits the dealer as well, he is getting the 100 bucks from you but saving you money on the sales tax which he doesn't get anyways. its a good deal for you because you save alot of money and don't lose anything really.

pinito

I did this when I sold / bought my current car. Legal but my dealer did it for me as a courtesy, no fee involved.

Stewie

Sounds like a good deal to me.

akelley

Is this a common practice? First time I've ever heard of it. NY state does the same in regard to calculating the sales tax on a new vehicle. My friend and I (who wants to buy my car) was discussing the cost I would sell him my car considering I would lose the tax savings if he bought it from me direct. I never thought you could have it go through the dealer when you bought your new car for the tax savings.

So then do I actually "sell" (as in transfer title) to the dealer and then my friend buys the car from the dealer (giving him the money which the dealer then gives to me)? Or does the dealer simply transfer the title to my friend? And then my friend is responsible for paying the sales tax when he goes to register the vehicle with the DMV, right?

Almost seems like a scam (money laundering), but hey, I'm not a lawyer so what do I know?

rescueswimmer

A kelley,
Its all just a paperwork trail totally legal. The dealer is just acting as a middle man. You give them your title. Which saves you tax on your new car. The dealer can A give you a check from the dealer and they collect from your friend, or B they get the Title endorse it then sign it over to your friend who pays you. Everybody is a winner except your friend who really doesnt save anything.

Stewie

But he doesn't lose anything either.

berlinrl

Your friend may actually save a little bit, because he'd have to pay for the title transfer on his
own if the dealer weren't doing it. This may be $25 or something.

SonnySoMoney

Update! I got the car yesterday and everything with it and the dealership went smoothly. The guy buying it tried swindling me at the end. He tried to work a deal where his out the door cost was 14,500 meaning I was only getting 13,200 for my car! I basically was going to pay his sales tax! I said no way...I wasn't allowing him to change the deal at the last minute! He thought he could get out of paying tax somehow. But it all worked out and now I have a sweet new car in my garage! Too bad it is raining Thanks to everyone who replied! Incidently, the dealership, Acura of Dayton did a great job and stuck by me through the whole ordeal...I would recommend checking them out...of course I got a good price by a fluke so I can't vouch for their prices...

ndabunka

It's legal and common but not all dealerships are willing to do it. If you've got one willing to do it, I say go for it. I had a similar situation with my prior AMG55. Acura only offered $37K, had a private buyer willing to pay $41K. Asked Acura to "handle" the paperwork for both cars and they refused. In my case, it would have saved ALL the taxes because the car I was selling was more expensive than the one I was buying. Damn dealer wouldn't do it and it cost me $1K. Still better than letting them buy it and mark it up but frustrating that they wouldn't help. If you've got a good dealer and they do it right, no problem.

akelley

Thanks all for clearing that up with me, and congrats on your new car SonnySoMoney.

Anyone know if Curry in Scarsdale, NY will handle the paperwork in this situation? Just another reason to use a dealer over another if they're willing to do the paperwork as a courtesy.

Just curious, ndabunka, did the dealership who refused to handle your title transfer to a third party give a reason why they wouldn't do it? Perhaps it's not legal in certain states (though as others explained the process, I can't see why it would be illegal)?