NsXMas said:
I took Mike's own admission that he hadnt thought about the tax situation after he wrote that "it would not cost the buyer a penny more" as suggesting that he may have been incorrect with his initial stance.
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Courtesy trade. Did I act inappropriatly?
- Thread starter mikec
- Start date
I took Mike's own admission that he hadnt thought about the tax situation after he wrote that "it would not cost the buyer a penny more" as suggesting that he may have been incorrect with his initial stance.
If I were told that I could exchange a cashier's check for an NSX and then told that the title would be mailed to me in 7-10 days, I think I would have second thoughts too.
As honest as you may be, you changed the rules of the deal without the buyer's permission.
As honest as you may be, you changed the rules of the deal without the buyer's permission.
My opinion is that the buyer got spooked because he/she may have planned to assign a lower sales price on the vehicle to lessen the cost when registering it. But since you were going to do an "in and out" through the dealer, the dealer would have to file paperwork on the NSX.
So, what may have been a good deal for the buyer, now ended up costing him/her more.
Now, keep in mind, this is bending the law for sales tax. Heck, I was trying to think of a way to lessen the sales tax on my 02 but ended up paying the full amount since I bought from a dealer and didn't want to take any chances with the state.
So, what may have been a good deal for the buyer, now ended up costing him/her more.
Now, keep in mind, this is bending the law for sales tax. Heck, I was trying to think of a way to lessen the sales tax on my 02 but ended up paying the full amount since I bought from a dealer and didn't want to take any chances with the state.
I agree that this scenario is a real possibility. (Of course, this is strictly speculation on our parts.)NsXMas said:
I don't know how it works in PA or VA but in Arizona, if you buy a car from a private seller, you pay no sales tax, but if bought from a dealer, you do. If you buy it from an out of state dealer, you pay the difference in tax rates between the state in which you bought the car (and supposedly paid the sales tax), and the tax rate in AZ.
Yes, it varies from one state to another. In Illinois, you pay sales tax when buying from a private seller, but at a rate lower than when buying from a dealer. Also, in Illinois, you save the sales tax (paying only on the difference) when trading in a car on the purchase of another car; you also save the sales tax if you sell a car to a different dealer (in a separate transaction, obviously) within 60 days of buying a car (but you don't save sales tax if you sell a car privately).SCS2k said:
My understanding is that in some states, including California, you don't save the sales tax when trading in a car, and you must pay sales tax on the full amount of the purchased car.
NsXMas said:
I would guess that would have more to do on how far this "drive up" was. If it was an hour or so away, sure...but if the car was further than that, I personally wouldn't waste my time either. I'm sure the buyer has had his own headaches...the used car market is not a friendly place and there are a ton of scams out there.
If I smelled trouble, I wouldn't waste my time to drive to say, Portland from Seattle. Just wouldn't be worth the 5hr round trip time, I have better things to do. Time is money friend.
I believe you acted inappropriately. You made a deal with this individual, but you tried to change the conditions of the deal the night before.
Thank you for all the comments. I think if we both had a better understanding, this deal would have not gone bad and I would have had a new S4 and the buyer would have had the NSX that he wanted. Many of the posts have questions that I would like to answer here.
1. The sales tax law in Pennsylvania: The Pennsylvania buyer pays 6% sales tax on the amount of cash that changes hands whenever he buys a car, either privatly or through a dealer. For example: If I buy a $50,000 car outright I pay $3,000 of sales tax. If I buy the car, but trade $20,000 worth of good (diamonds, guns, merchandise, etc), I pay sales tax on the remaining $30,000 ($1800). If I trade a car of equal or greater value, then there is no sales tax to pay because I'm not outlaying any cash.
2. What is a courtesy trade. It is an arrangement made with an authorized car dealer that they will trade your car and immediatly resell it for the beforehand agreed upon amount to the buyer. Some dealers will do this; others will not because it costs them effort and the only benifit to them is in selling you a car that you otherwise wouldn't buy if they would not extend you the courtesy.
3. Is it legal? Yes! It is entirely legal. Specifically, the dealer agrees to buy your car and resell it immediatly to the buyer. Now why would a dealer do such a thing as buy and sell a car without making a dime on it? Because they are doing it as a favor to you to get you to buy their car. Since the dealer does not touch the car, other than doing the paperwork, they have no expense in it, such as prep, advertisment or other expenses.
4. Is it safe for the buyer? In fact, it is safer than buying the car privatly. The buyer is actually buying the car from the car dealer, and if a problem is found they have recourse with the dealer, not the private buyer. This actually puts the dealer at a liability risk.
In my specific case, the Audi dealer has a policy that they will not do courtesy trades, but would have accomodated me because I have purchased three cars form them in the past. However, the y required me to have the car inspected against frame and prior accident damage at a cost to me of $200 because they are lible for the car, not me.
5. Why can't the dealer just keep the car and refuse to sell it to the buyer at the prearranged price? For a number of reasons: A: The arrangement is already setup prior to anything being signed. B: If the dealer would cheat and do this, the deal would be stopped on the spot. All the parties are present and signing the documents. For example, Lets say that happned: A: I would not buy the new car from them. B: They would need to believe they can sell the car at the profit margin they need. C: They believe they could get away with such dirty behavior. This just doesn't happen, especially with a respected new car dealer.
For an out of state buyer; how does the courtesy trade transaction differ from a private transaction:
Private: The buyer pays me. I sign the title over to him. We go to a a notory who handles car transfers. The title is notorized where I signed and the buyer can purchase a transit plate so he can drive the car home. Once home, he brings the title to where ever does car transfers and applies for a perminent plate. He also pays the applicable taxes. He gets a title issued from his state in the mail.
Courtesy trade: The buyer pays me or the dealer for the agreed upon amount, which may be less than the acutal amount. The title is signed by both me and the dealer. New title origionating in the state of the buyer is applied for. A transit plate is provided along with temporary registration. The buyer drives (or ships) the car home. A new title issued from his home state is mailed to him in 7 to 10 days. He then applies for perminant tags and pays applicable taxes. If things go wrong, his recourse is with the dealer, not me. And they say.. If you are going to sue someone, sue the entity with the most money. And that sure isn't me.
1. The sales tax law in Pennsylvania: The Pennsylvania buyer pays 6% sales tax on the amount of cash that changes hands whenever he buys a car, either privatly or through a dealer. For example: If I buy a $50,000 car outright I pay $3,000 of sales tax. If I buy the car, but trade $20,000 worth of good (diamonds, guns, merchandise, etc), I pay sales tax on the remaining $30,000 ($1800). If I trade a car of equal or greater value, then there is no sales tax to pay because I'm not outlaying any cash.
2. What is a courtesy trade. It is an arrangement made with an authorized car dealer that they will trade your car and immediatly resell it for the beforehand agreed upon amount to the buyer. Some dealers will do this; others will not because it costs them effort and the only benifit to them is in selling you a car that you otherwise wouldn't buy if they would not extend you the courtesy.
3. Is it legal? Yes! It is entirely legal. Specifically, the dealer agrees to buy your car and resell it immediatly to the buyer. Now why would a dealer do such a thing as buy and sell a car without making a dime on it? Because they are doing it as a favor to you to get you to buy their car. Since the dealer does not touch the car, other than doing the paperwork, they have no expense in it, such as prep, advertisment or other expenses.
4. Is it safe for the buyer? In fact, it is safer than buying the car privatly. The buyer is actually buying the car from the car dealer, and if a problem is found they have recourse with the dealer, not the private buyer. This actually puts the dealer at a liability risk.
In my specific case, the Audi dealer has a policy that they will not do courtesy trades, but would have accomodated me because I have purchased three cars form them in the past. However, the y required me to have the car inspected against frame and prior accident damage at a cost to me of $200 because they are lible for the car, not me.
5. Why can't the dealer just keep the car and refuse to sell it to the buyer at the prearranged price? For a number of reasons: A: The arrangement is already setup prior to anything being signed. B: If the dealer would cheat and do this, the deal would be stopped on the spot. All the parties are present and signing the documents. For example, Lets say that happned: A: I would not buy the new car from them. B: They would need to believe they can sell the car at the profit margin they need. C: They believe they could get away with such dirty behavior. This just doesn't happen, especially with a respected new car dealer.
For an out of state buyer; how does the courtesy trade transaction differ from a private transaction:
Private: The buyer pays me. I sign the title over to him. We go to a a notory who handles car transfers. The title is notorized where I signed and the buyer can purchase a transit plate so he can drive the car home. Once home, he brings the title to where ever does car transfers and applies for a perminent plate. He also pays the applicable taxes. He gets a title issued from his state in the mail.
Courtesy trade: The buyer pays me or the dealer for the agreed upon amount, which may be less than the acutal amount. The title is signed by both me and the dealer. New title origionating in the state of the buyer is applied for. A transit plate is provided along with temporary registration. The buyer drives (or ships) the car home. A new title issued from his home state is mailed to him in 7 to 10 days. He then applies for perminant tags and pays applicable taxes. If things go wrong, his recourse is with the dealer, not me. And they say.. If you are going to sue someone, sue the entity with the most money. And that sure isn't me.
Thank you for all the comments. I think if we both had a better understanding, this deal would have not gone bad and I would have had a new S4 and the buyer would have had the NSX that he wanted. Many of the posts have questions that I would like to answer here.
1. The sales tax law in Pennsylvania: The Pennsylvania buyer pays 6% sales tax on the amount of cash that changes hands whenever he buys a car, either privatly or through a dealer. For example: If I buy a $50,000 car outright I pay $3,000 of sales tax. If I buy the car, but trade $20,000 worth of good (diamonds, guns, merchandise, etc), I pay sales tax on the remaining $30,000 ($1800). If I trade a car of equal or greater value, then there is no sales tax to pay because I'm not outlaying any cash.
2. What is a courtesy trade. It is an arrangement made with an authorized car dealer that they will trade your car and immediatly resell it for the beforehand agreed upon amount to the buyer. Some dealers will do this; others will not because it costs them effort and the only benifit to them is in selling you a car that you otherwise wouldn't buy if they would not extend you the courtesy.
3. Is it legal? Yes! It is entirely legal. Specifically, the dealer agrees to buy your car and resell it immediatly to the buyer. Now why would a dealer do such a thing as buy and sell a car without making a dime on it? Because they are doing it as a favor to you to get you to buy their car. Since the dealer does not touch the car, other than doing the paperwork, they have no expense in it, such as prep, advertisment or other expenses.
4. Is it safe for the buyer? In fact, it is safer than buying the car privatly. The buyer is actually buying the car from the car dealer, and if a problem is found they have recourse with the dealer, not the private buyer. This actually puts the dealer at a liability risk.
In my specific case, the Audi dealer has a policy that they will not do courtesy trades, but would have accomodated me because I have purchased three cars form them in the past. However, the y required me to have the car inspected against frame and prior accident damage at a cost to me of $200 because they are lible for the car, not me.
5. Why can't the dealer just keep the car and refuse to sell it to the buyer at the prearranged price? For a number of reasons: A: The arrangement is already setup prior to anything being signed. B: If the dealer would cheat and do this, the deal would be stopped on the spot. All the parties are present and signing the documents. For example, Lets say that happned: A: I would not buy the new car from them. B: They would need to believe they can sell the car at the profit margin they need. C: They believe they could get away with such dirty behavior. This just doesn't happen, especially with a respected new car dealer.
For an out of state buyer; how does the courtesy trade transaction differ from a private transaction:
Private: The buyer pays me. I sign the title over to him. We go to a a notory who handles car transfers. The title is notorized where I signed and the buyer can purchase a transit plate so he can drive the car home. Once home, he brings the title to where ever does car transfers and applies for a perminent plate. He also pays the applicable taxes. He gets a title issued from his state in the mail.
Courtesy trade: The buyer pays me or the dealer for the agreed upon amount, which may be less than the acutal amount. The title is signed by both me and the dealer. New title origionating in the state of the buyer is applied for. A transit plate is provided along with temporary registration. The buyer drives (or ships) the car home. A new title issued from his home state is mailed to him in 7 to 10 days. He then applies for perminant tags and pays applicable taxes. If things go wrong, his recourse is with the dealer, not me. And they say.. If you are going to sue someone, sue the entity with the most money. And that sure isn't me.
1. The sales tax law in Pennsylvania: The Pennsylvania buyer pays 6% sales tax on the amount of cash that changes hands whenever he buys a car, either privatly or through a dealer. For example: If I buy a $50,000 car outright I pay $3,000 of sales tax. If I buy the car, but trade $20,000 worth of good (diamonds, guns, merchandise, etc), I pay sales tax on the remaining $30,000 ($1800). If I trade a car of equal or greater value, then there is no sales tax to pay because I'm not outlaying any cash.
2. What is a courtesy trade. It is an arrangement made with an authorized car dealer that they will trade your car and immediatly resell it for the beforehand agreed upon amount to the buyer. Some dealers will do this; others will not because it costs them effort and the only benifit to them is in selling you a car that you otherwise wouldn't buy if they would not extend you the courtesy.
3. Is it legal? Yes! It is entirely legal. Specifically, the dealer agrees to buy your car and resell it immediatly to the buyer. Now why would a dealer do such a thing as buy and sell a car without making a dime on it? Because they are doing it as a favor to you to get you to buy their car. Since the dealer does not touch the car, other than doing the paperwork, they have no expense in it, such as prep, advertisment or other expenses.
4. Is it safe for the buyer? In fact, it is safer than buying the car privatly. The buyer is actually buying the car from the car dealer, and if a problem is found they have recourse with the dealer, not the private buyer. This actually puts the dealer at a liability risk.
In my specific case, the Audi dealer has a policy that they will not do courtesy trades, but would have accomodated me because I have purchased three cars form them in the past. However, the y required me to have the car inspected against frame and prior accident damage at a cost to me of $200 because they are lible for the car, not me.
5. Why can't the dealer just keep the car and refuse to sell it to the buyer at the prearranged price? For a number of reasons: A: The arrangement is already setup prior to anything being signed. B: If the dealer would cheat and do this, the deal would be stopped on the spot. All the parties are present and signing the documents. For example, Lets say that happned: A: I would not buy the new car from them. B: They would need to believe they can sell the car at the profit margin they need. C: They believe they could get away with such dirty behavior. This just doesn't happen, especially with a respected new car dealer.
For an out of state buyer; how does the courtesy trade transaction differ from a private transaction:
Private: The buyer pays me. I sign the title over to him. We go to a a notory who handles car transfers. The title is notorized where I signed and the buyer can purchase a transit plate so he can drive the car home. Once home, he brings the title to where ever does car transfers and applies for a perminent plate. He also pays the applicable taxes. He gets a title issued from his state in the mail.
Courtesy trade: The buyer pays me or the dealer for the agreed upon amount, which may be less than the acutal amount. The title is signed by both me and the dealer. New title origionating in the state of the buyer is applied for. A transit plate is provided along with temporary registration. The buyer drives (or ships) the car home. A new title issued from his home state is mailed to him in 7 to 10 days. He then applies for perminant tags and pays applicable taxes. If things go wrong, his recourse is with the dealer, not me. And they say.. If you are going to sue someone, sue the entity with the most money. And that sure isn't me.
OK - here you do not pay GST (goods and services sales tax) of 7% if you buy privately, but you still have to pay provincial sales tax (8%). So if you buy from a dealer, you're paying 15%; if you buy privately, you pay 8%.
Different where you are. Love the low taxes in the US.
Different where you are. Love the low taxes in the US.
Most banks will ofer a lower interest rate for a car purchased from a dealer vs private party. So the buyer may have been better off financially as well going throught the dealer.
The part about having to pay sales tax to a private seller is a bit bizarre. Especially if the car is going to an out of state buyer. I couldn't find anything on the Pennsy DOT website about this. http://www.dmv.state.pa.us/
Hugh said:
You don't pay sales tax to a private seller. You pay it to the state. They collect it when you apply for registration (tags).
mikec said:
That makes sense, I was jsut a bit confused by your previous post. Probably from laughing so hard at the Murci thread.
Anyway, the only reason that I can think of that scared off the buyer was the fact that he probably thought he couldn't fudge the price of the car on his paperwork when registering it in his home state.
Hugh said:
This would be sales tax law. In the states I've been in (MO and TX) you pay sales tax to the county, no matter who you buy the car from. The amount the Audi buyer would have to pay in this case because he's trading another car. The NSX buyer has to pay the state/county the same amount, whether he buys from the dealer or the private party.
(From my experience, and this discussion. I'm not a lawyer)
It gets worse...In washington state they have a book of car values that they use...I sold a 92 LS400 for 7500$ because after 3 months in the classifieds that was all I could get for it...the state "looked up the value" in their "guide book" and they decided the car was worth 14,700$!! and demanded that the buyer paid sales tax on 14,700$....Crooked Government at it's best
It doesn't seem fair. Whenever the same car gets sold, the sales tax is paid on it again and again.
When you sell a car and buy another one you need to pay tax on the new one unless you trade in the old one. Then you save the tax on the traded amount.
You should be able to save the tax by selling your car, putting the money in some sort of escrow account, then using the money to buy another car. But it doesn't work that way.
In a way this deal not going through may have been a blessing. In order to do it because of the short time frame I was going to settle on a new car that was not quite what I wanted. Not my first color choice or equipment package, and you cannot order one until August when the 07's are available.
I'm so confused. my head hurts. That sounds like the topic for another thread. I need some theraputic advice.
When you sell a car and buy another one you need to pay tax on the new one unless you trade in the old one. Then you save the tax on the traded amount.
You should be able to save the tax by selling your car, putting the money in some sort of escrow account, then using the money to buy another car. But it doesn't work that way.
In a way this deal not going through may have been a blessing. In order to do it because of the short time frame I was going to settle on a new car that was not quite what I wanted. Not my first color choice or equipment package, and you cannot order one until August when the 07's are available.
I'm so confused. my head hurts. That sounds like the topic for another thread. I need some theraputic advice.
Mike,
just curious what type of S4 you were getting and if the dealer was Autohaus?
just curious what type of S4 you were getting and if the dealer was Autohaus?
zahntech said:It gets worse...In washington state they have a book of car values that they use...I sold a 92 LS400 for 7500$ because after 3 months in the classifieds that was all I could get for it...the state "looked up the value" in their "guide book" and they decided the car was worth 14,700$!! and demanded that the buyer paid sales tax on 14,700$....Crooked Government at it's best
This can happen in NY too. If you have a notarized bill of sale it is a lot less likely to happen
Is there any state that refunds sales tax when you trade down?
Where is your NSX now?
Where are pictures of the S4? You know I am a German car guy too!
steveny said:
I didn't realize that NY became such tax nazis! Take a look at this.
You're expected to pay sales tax directly to the State for good or services purchased out of State but use in NY.
This is just too precious:
You're expected to pay tax directly to the tax department if:
You take your stereo to be fixed in Connecticut and bring it back to NY to use once repaired.
You mail a watch to Pennsylvania to be fixed and it is mailed back to you in NY once repaired.
You buy sheets over the Internet
Blah blah blah.......
One of the reasons I left NYC was that I was sick and tired of being triple taxed. But this shit is ridiculous.
It's a sign, now go out and drive the piss out of your nsx.
mikec said:
That is exactly what I do not agree with. You buy a new honda for $30K and pay $2475 tax, why must tax be paid again when the car is sold as used?
I guess it's like buying used jeans at a second hand store. The original buyer paid tax, and now I am going to pay tax again when I buy them.
I just hate the government taking all our money. :smile:
