Sales tax when buying out of state; up front vs rolling into loan?

Mycelus

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Hey all. I am looking to pick up a 2017 GT350 early next year and I am getting all my ducks in a row. I currently have a 2014 GT, located in Minnesota. When I purchased this car from Illinois, I was told by the dealership that "Illinois cannot collect sales tax on behalf of Minnesota."

From what I understood from the dealer, some states allow you to roll the registration fees & tax into the car loan from CERTAIN states, and not from others. When I asked if the registration costs could be added to my loan, I was told no due to buying in IL, and registering in MN.

The GT350 I end up buying will almost certainly not be in Minnesota. I am wondering how to know whether I can roll the registration costs into the loan, or whether I'll pay them up front? On a $60K car at 6.5% sales tax rate, I'm looking at around $3900.

I would prefer to put the $3900 into my down payment instead of paying it for sales tax at the DMV.

Hoping someone can school me on how this works.




 

cerbomark

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maybe I m slow but I don t get the difference between paying the reg in the loan or putting that on the downpayment and then rolling the fees(reg) into loan?
 

Some Random Guy

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In my experience this depends on the dealer.
If they plan to charge your THEIR state taxes you can roll it into the loan and most states will allow you to deduct that payment from taxes owed when you re-title it. So if the dealer state is at or below your home state’s tax rate this would work out. You end up paying title fees/registration fees twice, but you may find that acceptable in order to roll taxes into the loan.
If they plan on doing some sort of transit title or transit tags (or no tags in some states), then you don’t really have a choice but to pay home state taxes separately that I’m aware of.
 

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From what I understood from the dealer
Odds are you're registering the car in MN. Take a trip to a local DMV office and ask them to explain your options. While discussing, have them cite references for you to review later.

There are 50 states and 3,000+ counties in the US; each municipality and state has their own tax authority with their own regulations.

When dealing with a similar issue in CO, I got some good, quick guidance, with references I could then discuss with an out-of-state dealer in the future.
 
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cerbomark

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In my experience this depends on the dealer.
If they plan to charge your THEIR state taxes you can roll it into the loan and most states will allow you to deduct that payment from taxes owed when you re-title it. So if the dealer state is at or below your home state’s tax rate this would work out. You end up paying title fees/registration fees twice, but you may find that acceptable in order to roll taxes into the loan.
If they plan on doing some sort of transit title or transit tags (or no tags in some states), then you don’t really have a choice but to pay home state taxes separately that I’m aware of.
be careful, some states (NY for one). if you pay tax to another state and they don t roll it over you ll be tax again.
Ever state may be different. You have to ask.
The rules also may change if there is a loan. I had no loan so I paid for car and was on my own for instate reg and taxes with my out of state purchase .
 


04DarkShadowGT

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Hey all. I am looking to pick up a 2017 GT350 early next year and I am getting all my ducks in a row. I currently have a 2014 GT, located in Minnesota. When I purchased this car from Illinois, I was told by the dealership that "Illinois cannot collect sales tax on behalf of Minnesota."

From what I understood from the dealer, some states allow you to roll the registration fees & tax into the car loan from CERTAIN states, and not from others. When I asked if the registration costs could be added to my loan, I was told no due to buying in IL, and registering in MN.

The GT350 I end up buying will almost certainly not be in Minnesota. I am wondering how to know whether I can roll the registration costs into the loan, or whether I'll pay them up front? On a $60K car at 6.5% sales tax rate, I'm looking at around $3900.

I would prefer to put the $3900 into my down payment instead of paying it for sales tax at the DMV.

Hoping someone can school me on how this works.
What am I missing here? Why does it matter if your $3,900 goes to pay the tax off or for a down payment? Either way the "loan amount" would be the same.
 

cerbomark

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What am I missing here? Why does it matter if your $3,900 goes to pay the tax off or for a down payment? Either way the "loan amount" would be the same.
I asked him same question on the first response ???
 

Lgb0250

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What am I missing here? Why does it matter if your $3,900 goes to pay the tax off or for a down payment? Either way the "loan amount" would be the same.
I asked him same question on the first response ???
Probably has something to do with the purchase order and his retail financing. If the state he buys in won’t pay the sales tax where he is going to register it, he will have to come up with the tax money when he registers it. So if his lender is requiring 10% down and the purchase order only shows the 60000 he needs 6000 + the 3900 when he goes to register it. Total 9900 out of pocket.

if the dealer does pay the tax then the purchase order is going to show 60000 + 3900 tax = 63900 - 10% down leaves him only 6390 out of pocket. Big difference in up front fees if not financed.

most dealers now do everything electronically and deal with every state. I would suggest the OP ask upfront what the p9licy is and steer clear of dealers that don’t. I bough5 my last vehicle in MD and had no problem wi5h them handling my SC registration.
 

Wingnutzz

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Absolutely. Just spent time today educating my salesman on taxes. I’m in a different county and city (Teller and Woodland Park vs ElPaso and Colorado Springs) than the dealer. Gets even more complicated as the WP tax on a vehicle is different than general merchandise. Our Teller County Clerk and Recorder Motor Vehicle Office is very good and has it all listed on their web site. But it is crazy the different rates and rules for so many jurisdictions! BTW, picking up my car tomorrow morning. No surprises. Price Protection discounted, my $1000 Order rebate. Soft sale on additions, but I passed! 😁😁😁. All seems to be as expected. Will know for sure tomorrow!
Odds are you're registering the car in MN. Take a trip to a local DMV office and ask them to explain your options. While discussing, have them cite references for you to review later.

There are 50 states and 3,000+ counties in the US; each municipality and state has their own tax authority with their own regulations.

When dealing with a similar issue in CO, I got some good, quick guidance, with references I could then discuss with an out-of-state dealer in the future.
 

MAGS1

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Don’t ever roll ANYTHING into the loan…..

Not paperwork.
Not GAP insurance
Not ANYTHING.



UNLESS it’s a 0% APR loan.
And check your auto insurance before buying any gap insurance from the dealer. A lot of insurance companies are including it (or have it as an available rider) in their policies now too.
 

Cory S

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And check your auto insurance before buying any gap insurance from the dealer. A lot of insurance companies are including it (or have it as an available rider) in their policies now too.
Better yet, put down as much as possible for instant positive equity, shorter loan term, lower payment, and zero need for GAP.
 

MAGS1

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Better yet, put down as much as possible for instant positive equity, shorter loan term, lower payment, and zero need for GAP.
True statement
 
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Mycelus

Mycelus

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What am I missing here? Why does it matter if your $3,900 goes to pay the tax off or for a down payment? Either way the "loan amount" would be the same.
maybe I m slow but I don t get the difference between paying the reg in the loan or putting that on the downpayment and then rolling the fees(reg) into loan?
Hey guys. Thanks for asking. So consider me a total moron when it comes to financing, etc.

The reason this came to mind is because when I bought my current GT in IL and registered in MN, I had to pony up cash to register it, since I couldn't roll that into my loan. With my next car, I will likely have to do the same again, so instead of putting that $4K into the loan, I'd put the $4K towards the registration, and then take out less of a loan. I guess in any scenario, having a smaller loan would be better since I would pay less interest over time. I was thinking maybe for some reason, it may be advantageous of me to roll the registration fees into the loan.
 
OP
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Mycelus

Mycelus

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Odds are you're registering the car in MN. Take a trip to a local DMV office and ask them to explain your options. While discussing, have them cite references for you to review later.

There are 50 states and 3,000+ counties in the US; each municipality and state has their own tax authority with their own regulations.

When dealing with a similar issue in CO, I got some good, quick guidance, with references I could then discuss with an out-of-state dealer in the future.
I'm not understanding the citing references part. What exactly do you mean?
 

 
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