Trading In Your Vehicle! (page 2)
autoXcite Appraisal Services

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Many consumers who plan to buy from a dealer already have a vehicle they plan to trade in . Let's first understand how a trade in effects the potential deal you wish to make with a dealer.

Your trade car will (hopefully) represent some cash value toward lowering the purchase price of the vehicle you desire to purchase.

For example:

Let's say you wish to purchase a vehicle that retails for $15,000 and your current trade in is valued at $5,000.

This leaves you with a trade difference price of $10,000 (price after your trade is factored in the deal [the price you pay]).

This means you could buy the new vehicle for $10,000 after factoring in your trade in .

Pretty simple so far, right?

The state tax will apply to the trade difference amount of $10,000 instead of the beforehand retail price of $15,000. If you were registering the car in MA (for example), 5% sales tax would apply to the $10,000, not the $15,000 retail price. So you would save approximately $250 in taxes. Your tax amount on $15,000 would be $750. The tax on $10,000 would be $500, and so forth.

IF you owe money on the Trade In.

What usually complicates this process is when there is a payoff on the trade in (i.e. if you owed $5,000 to a lien holder on the trade in , before you would obtain the vehicles' title of actual ownership).

GO ON TO TRADE IN (Page 3)