What is invoice?

[dcmdon]

You've been getting great advice. I would add one more thing to conside; How your state taxes a vehicle purchase or trade. It could have a bearing on whether or not you want to trade or sell your vehicle. For example, here in Kentucky when we trade a vehicle for another one, we pay 6% sales tax on the trade difference and that significantly reduces the tax burden over not trading.

Here, when we buy a new vehicle without trading, we must pay 6% on 90% of the MSRP or whatever the sale price was (ie. Invoice) whichever is least.

Examples: New vehicle = $57,000 Your trade(dealer offer) = $30,000 Difference is $27,000
Tax = 27,000 x .06 = $1620 Cost to trade is $28,620 (trade diff. plus tax)
Total cost of vehicle $30,000(your vehicle value) + $27,000(cash) + $1620(tax) =
$58,620

Not trading example: You sell your vehicle somewhere else and use the money to go
buy a new one.

New vehicle = $57,000 (say this number is less than 90% of MSRP)
Tax = 57,000 x .06 = $3420 Total cost to buy new without trade = $60,420.

In these examples you would need to sell your vehicle for $1800 higher to someone in order to compensate for the extra tax you will pay if you do not trade.

This is HUUGGEEEE. In how it impacts the trade vs sell it yourself decision.

Lets say I'm buying a 60k truck and have a truck that the dealer will give me 30k for.
Lets also assume a 6% sales tax rate.

That trade will reduce my tax burden on the new vehicle by $1800 (30,000 x .06 = $1800).

So if I realistically thought I'd clear 33K selling it on my own, it now only saves me $1200 and may not be worth the hassle.

If I've got an older trade that is only worth 5k on a trade, but I can sell for 9k myself. (Yes this is realistic. Dealers low ball on older cars because there is significant warranty risk in states that require them to provide a used car warranty)

That $5000 car with the tax break is worth only $300 extra, $5300. So if your choice is trading for $5300 or selling for $9000, its a no brainer.

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[u-joint]

This is HUUGGEEEE. In how it impacts the trade vs sell it yourself decision.

Lets say I'm buying a 60k truck and have a truck that the dealer will give me 30k for.
Lets also assume a 6% sales tax rate.

That trade will reduce my tax burden on the new vehicle by $1800 (30,000 x .06 = $1800).

So if I realistically thought I'd clear 33K selling it on my own, it now only saves me $1200 and may not be worth the hassle.

If I've got an older trade that is only worth 5k on a trade, but I can sell for 9k myself. (Yes this is realistic. Dealers low ball on older cars because there is significant warranty risk in states that require them to provide a used car warranty)

That $5000 car with the tax break is worth only $300 extra, $5300. So if your choice is trading for $5300 or selling for $9000, its a no brainer.

It's funny how this varies by state.

In Oklahoma the sales tax is on the purchase price of the vehicle. What you sale (or trade) your old one for has nothing to do with the sales tax paid, so the decision between a trade or a sale is an equal comparison.

Sucks that some states hold you hostage to dealerships like that.

 

[dcmdon]

It's funny how this varies by state.

In Oklahoma the sales tax is on the purchase price of the vehicle. What you sale (or trade) your old one for has nothing to do with the sales tax paid, so the decision between a trade or a sale is an equal comparison.

Sucks that some states hold you hostage to dealerships like that.

Think of it the other way.

They aren't holding you hostage. They're giving you a break. You don't have to go through the dealer.

 

[STLMike]

I'd take that another step further.......
For example, those you list really low-balled my Silverado. Even the Jeep dealer was only talking 16,500. I got stupid low offers from one of the online places - 14K and was thinking are you stupid or think I am stupid? Even my dealer offered me more.
So I took my truck to a Chevy dealer and asked if they ever bought used trucks directly..... yes, they do.
And I got more than anyone else offered.
I left them my truck and title, check in my pocket and even got a ride back home from them.

This happened to me recently. I was tired of driving my manual 2020 JT Sport. I decided to get out of it and into a JTR auto. I was tremendously lowballed by the local Jeep dealer on trade. I went the Autotrader, carmax, etc route and still wasn't getting near what I wanted but more than the local Jeep dealer.

I run a service department and we needed some new trucks and vans and for those I prefer Fords.
I was in negotiating the fleet deal on 2 vans and 3 trucks and happened to ask if they buy used cars. I showed them my JT. They bought it on the spot for $7k MORE than the local Jeep dealer offered me. They sold it a week later...

 

[ShadowsPapa]

It's funny how this varies by state.

In Oklahoma the sales tax is on the purchase price of the vehicle. What you sale (or trade) your old one for has nothing to do with the sales tax paid, so the decision between a trade or a sale is an equal comparison.

Sucks that some states hold you hostage to dealerships like that.

Iowa figures you have paid the tax once already. If you pay it on the total price but are using a vehicle to pay for part of the new vehicle, you are paying tax on money you have already paid tax on.

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