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

[Mycelus]

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.

This is along the lines of what I was worried about. Basically I don't want to get denied the financing or get quoted a worse APR because of how the math plays out between paying the registration up front vs rolling it into the loan. I wasn't sure if one was preferable from the lender's point of view when approving and deciding on an APR.

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[Mycelus]

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.

I presume GAP insurance from a lender like a credit union is preferable to one a dealer would give you because it's a better deal?

 

[Mycelus]

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

How do you decide at what point you'd no longer need/want GAP?

 

[MAGS1]

I presume GAP insurance from a lender like a credit union is preferable to one a dealer would give you because it's a better deal?

Typically, yes. Might be worth checking your auto policy to see if it’s included or available too.

 

[wingnutt]

devils advocate here…but if you need to roll the reg into the loan, perhaps a GT350 isn’t the best option?

…no hate, just sayin

 

[Mycelus]

devils advocate here…but if you need to roll the reg into the loan, perhaps a GT350 isn’t the best option?

…no hate, just sayin

I get what you're saying. No need for me to roll it in. I was wondering if 1 was preferable over the other, that's all

 

[wingnutt]

I get what you're saying. No need for me to roll it in. I was wondering if 1 was preferable over the other, that's all

gotcha, and preferable is to never add a thing to the loan…ever.

***disclaimer*** any advice needs to be shaken well, do not leave in direct sunlight, and your mileage may vary

 

[Cory S]

How do you decide at what point you'd no longer need/want GAP?

If you put down 20% or more.

 

[Some Random Guy]

If you put down 20% or more.

I think it depends on the vehicle. There’s no 1 size fits all answer. If it is a new vehicle and generic, I think you hit the nail on the head. But a used vehicle like OP’s is 10%, 5% or less. Current market dynamics may not be normal though. A low depreciation vehicle will be less in both cases. Ultimately the buyer needs to research. What is their worst case negative equity, and can they afford it?
I’d ask the following:
1) Do I have another vehicle I can drive or borrow? If not, I need an immediate down payment in the case of a total loss on a new vehicle. GAP may be good.
2) Does my insurance have either GAP OR New Vehicle Replacement. I think this is usually a 20% bump in payout. If it does, I might pass on GAP.
3) After answering the previous 2, if I would have to immediately replace the vehicle with a new one, can I afford to pay my worst case negative equity AND a new (or new to me) vehicle to keep my job using my savings or some other liquid instrument? If so, I might pass on GAP to use that money for something else like topping off my emergency fund.

 

[Skye]

I'm not understanding the citing references part. What exactly do you mean?

When you sit down with the DMV or tax authority you intend to register with and they explain the process or their expectations, ask them to provide a citation or reference where in the tax code or area regulations those rules they speak of.

"You'll need to pay X% tax, place it here, roll it there, etc., according to Hennepin County Tax Revenue Regulation 1.3-5."

Any official speaking to you, explaining the process, should be able to cite or reference their basis for their ruling. It helps during future conversations, as everyone explains themselves and their requirements.

If a dealer you're working with in another state claims he needs to do something, collect tax a certain way, the correct answer would be something along the lines as described above, not, "The last time we did this, if I remember right, I think salesperson Bob did it this way..."

As you're well aware, these topics can be muddy. The references can assist in clarifying all your options and steering the conversation to the correct answer.

 

[Lgb0250]

GAP ins is nothing but a money maker for the dealer. The business manager also makes money on it. Basically the same for any add ons bought in the business office Such as extended warranties, L&D, protection packages, etc etc.

 

[cerbomark]

also consider a 2017 GT350 with no warranty could leave you spending money on repairs sooner than you might expect. check the warranty too. like @Wingnutzz said, maybe a different model mustang could be considered. Unless your tracking the car then I get it. good luck and move slowly, don t agree to anything until all your questions are satisfied.

 

[Cory S]

GAP ins is nothing but a money maker for the dealer. The business manager also makes money on it. Basically the same for any add ons bought in the business office Such as extended warranties, L&D, protection packages, etc etc.

Not to mention, the "Finance Manager" tries to get as much as he/she can by quoting you a higher APR than the banks come back with....(They pocket the difference) That's why credit unions are much better choice for financing.

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