They say you have to know to ask for this, so now you’ll know.
When buying a car, unless you ask them to include the sales tax in the loan, they won’t, and they won’t say a word about it.
This can leave you with a one-time payment of thousands of dollars when you go to get your tags.
We found this out through experience; when we called the car company, the very-oh-so-cheerful salesman on the phone gloated, “Oh, you have to know to ask for that.”
So now you’ll know: ask for sales tax to be included in your loan.
We have discovered since we’re not the only ones to have encountered this, which is why I am posting it here.
Knowledge is power, and ignorance opens you to all sorts of deception, some intentional and some not. It’s always good to ask questions whenever it is feasible. You would assume that a conscientious sales person would advise the buyer of their lending options. Unfortunately, those sales people work for corporations that define specificially how they should structure the sales interview. There is no doubt in my mind that the sales people are advised not to mention the sales tax for an obvious reason: if the sales tax is included in the amount borrowed, it will raise the monthly amount that the buyer must pay. Keeping the monthly payment amount as low as possible may give the car sales company a competitive edge and increase their sales.
Applying for a credit card is an example of where it is difficult to be completely knowledgeable about what you are entering into. Also, the online legal agreements that you must check “I accept” before you can proceed are other examples. If you try to actually read and understand the legal terms of the agreement, unless you are trained in corporate law, you probably will not understand all of the vague implications of the agreement that you are about to sign. For several years I worked for one of the largest banks in the USA. Fee income is a large part of the revenue of most banks, and it is the least-knowledgeable customers of the bank who usually end up paying the fees, mainly because they have failed to manage their accounts according to the fine print of the legal agreements that they signed but did not understand. I came to view much of this corporate fee structuring as predatory, seeing the people who could least affort to pay fees being stuck with fees amounting to hundreds of dollars. It made me sad to represent a company that was engaged in those predatory practices. I made a decision to leave the bank when I turned 60.
I always stipluate that I need to know all taxes, fees, charges, etc. before going for a loan. When a few “characters” have tried to surprise me after the fact like this I simply withdrew from the purchase, telling them I could not cover the difference, and advising them that if they had been more honest up front with me they would have seen the close of a successful sale, instead of my exit. I never give them another chance.
Buying or leasing a car can be a tricky thing. Tax, fees, etcetera can be confusing when comparing cars from dealership to dealership. If you’re in the market for a car, I’d take a look at http://www.fightingchance.com I make no money for mentioning them here, but have used their services. It’s a consumer advocate website where you pay $40 for specific info related to the car you’re looking at buying. I figured that it would be $40 well spent whether I saved money or not; I figured at the very least that I’d feel comfortable in what I was doing. Wow, I learned that everything I always did in car buying was wrong. I followed this guy’s advice, and used his information, and was able to get the car I wanted for US$1400 below invoice (US$2400 below MSRP). Not too shabby! Well worth the look. Another good, and free site, is http://www.carbuyingtips.com
I’ve always asked for a loan of a specific amount. In fact, I didn’t know you could ask for a loan of an unspecified amount that the bank would determine later. It may vary state-by-state.
I was able to get approved for more than I planned on needing. The bank provided me with an electronic check, which I brought to the dealership for payment the same day. It made the whole experience a breeze. I only entered a dealership twice: the initial test drive, and then to purchase and drive home the car. That was at the winning dealership (based on twelve quotes).
Jim, I was in the car business for over 20 years. A car dealer like any other business owner is responsible for collecting and paying sales taxes as a matter of doing business. I can’t imagine that being different anywhere. The only case where I could see that it would not be collected would be if a state has some sort of “casual sale” sales tax wherein you would buy a car from an individual and then pay tax based on the purchase price when you go to register it. If it’s a licensed auto dealer selling vehicles retail to the public then they MUST collect sales tax.
You might want to check with your state’s rules. The governing body of almost all new car dealers is NADA. Each state has affiliate organizations. In Georgia, It’s GADA. You should start by checking with your state’s organization to see what the deal is with taxes on dealers selling cars.
It just doesn’t jive that any licensed new or used automobile dealer would be exempt from collecting sales taxes…
I almost always pay the tax when I get my tags for the thing.
When the dealership does it they are often slow, the temporary tags expire before the real tags arrive, etc. In other words, it’s a pain and I’d rather just go to the DMV and do it myself. I am in VA and sometimes purchase vehicles in TN. I guess each state is different.