I am looking to trade in my wifes mini-van (and possibly a 2nd car ...... not the G8 yet) on a new/loaded mini-van. I've already looked at a couple models and have had the dealership do an appraisal on my wife's van. I knew going in that I'd be upside down a bit on the van but the dealer isn't disclosing much information and I am not familiar with their numbers (yet).

Based on what I know at this point which is the trade offer on the van and the kbb value of the new van (window sticker means nothing and I certainly wouldn't pay more than the kbb price anyhow ..... that's a starting point IMO), I can't come up with the numbers they are (I am under).

I want to get my facts straight before calling them back but there is an item I am missing. In MD, the sales tax is 6% - but against what total is this calculated?

If buying a new car outright, I know the sales tax would be calculated against the sale price of the car. However, when trading in another car, it is different.

Is the taxable value the difference between the sale price of the new vehicle and the trade in value of the old car? As in if new car is valued at $30,000 and the old car is traded in at $20,000, then the 6% sales tax would be applied only against $10,000 right?

I am trying to see what variables they are playing with and expose some of the number games to further my negotiation.

Also - how does this play out if I traded in two cars? Would the taxable value be the sale price of the new vehicle minus the combined trade value of the two older vehicles? And what if the combined value of the two older vehicles exceed the sale price of the new one? Does it actually have a possitive cash value?

You will need to check with your state as this is a state-by-state law. Typically, you pay the difference of the two vehicles. New vehicle is $30k and they give you $20k on your trade in, then you owe tax on the difference which is $10k. Like your example.

I am in Maryland and I believe we are under this policy.

Depends on the state. In Michigan its 6% on the purchase price, trade in doesn't matter...new or used doesn't matter. Its 6%.

Tax is paid on the difference in most states.

If they don't offer a line by line breakdown of the costs then go to a dealership who will...

In RI, you are taxed on the difference (30k-20k=10k which is taxable at 7%).

Since you have already paid sales tax on your current vehicle (when you bought it), you should only pay sales tax on the new vehicle.

You will have to inspect the paperwork throughly to make sure of this. I worked at a Acura dealership for 5 yrs and we used to submit the deal with the total to be financed (new vehicle + negative equity). We didnt break out new vehicle vs. old vehicle. Banks dont care about that. All they wanna know is how much your borrowing and how much your putting down.

If the numbers arent matching up. Ask for a purchase order. This will show the math line by line. If they do not want to give you one its because they are trying to rip you off. Go to another dealership.

what you should see on the PO.
price of vehicle (if they show the total of the new vehicle and the negative equity here, make them recalculate it correctly)
tax
title
registration
document fee
money down
additional cost (negative equity)

Any other line item are prolly fluff to pad the dealerships pocket. Tell them you are not gonna pay them because the profit on the car alone is sufficient profit margin.

As has been stated, each state is different. For example, in New Mexico we don't have a sales tax on cars, but a 3% excise tax on the trade difference.

Some states handle rebates as taxable, some don't. Most handle GM card money as cash down, after taxes have been added in.

The dealer should give you an itemized list of what you're paying. Taxable trade difference, sales tax, doc fee (depending on state, that may be taxable), license/title/registration fees. Cash settlement for that amount will add what you owe on the trade, then subtract cash down and the amount financed. The cash settlement should equal the amount your paying. If the dealer won't give you these itemizations, run, don't walk.

Since you have already paid sales tax on your current vehicle (when you bought it), you should only pay sales tax on the new vehicle.

You will have to inspect the paperwork throughly to make sure of this. I worked at a Acura dealership for 5 yrs and we used to submit the deal with the total to be financed (new vehicle + negative equity). We didnt break out new vehicle vs. old vehicle. Banks dont care about that. All they wanna know is how much your borrowing and how much your putting down.

If the numbers arent matching up. Ask for a purchase order. This will show the math line by line. If they do not want to give you one its because they are trying to rip you off. Go to another dealership.

what you should see on the PO.
price of vehicle (if they show the total of the new vehicle and the negative equity here, make them recalculate it correctly)
tax
title
registration
document fee
money down
additional cost (negative equity)

Any other line item are prolly fluff to pad the dealerships pocket. Tell them you are not gonna pay them because the profit on the car alone is sufficient profit margin.

This is an exact answer. :thumbsup: