Trade-In Over Allowance Cheats State and Everyone Else!

Ted, attitiude aside, your statements concerning the approach to purchasing

You have hit the nail on the head, Richard! The dealer who gives you say
$3000 trade in on any car whether you drive it in or push it in is cheating
everybody.

He cheats the State. Say a buyer has a wrecker that isn't worth a pile of
manure. He tows it in and gets a $3000 trade in allowance. That $3000
comes off the sales price. Thats 8% less sales tax on $3,000. Thats a big
loss to the State coffers. That is going to have to made up somewhere.
Some poor person is going to pay more for cigarettes on account of that.

He cheats another buyer. Say another buyer has a trade that REALLY IS WORTH
$3000. $3,000 is ALL he going to get from this shyster dealer. He's been
cheated because the other buyer got $3,000 for a wrecker that wasn't worth
a pile of horse manure; he was out nothing. Our buyer here is out a good
used car.

He cheats the inlaws. My grandpa had this here '39 Olds and offered to
sell it to my old man because gramps was going to buy a new Caddy. The car
was worth about $400. When grampa got to the Caddy dealer, the dealer told
him he would give him $600 trade on a new '50 Caddy. Thats a $200
OVERALLOWANCE! What do you think happened? Grandpa telephones pop and
tells him if he wants the car, he has to cough up $600 now! What a gyp.
Its the dealer's fault for playing those trade in games and cheating my
daddy out of 200 bucks.

It should be obvious that the whole concept of car trade in for a new model
contaminates any vestige of dealer ethics if there was ever any to start
with. It is the seed of evil without doubt. There is only one cure. Trade
in should be based on Kelly Blue Book as maximum allowable trade in. If a
seller thinks his car is worth more, he should sell it himself on the open
market. If a dealer thinks its worth less, he will have to come to
agreement with the new car buyer who can bring in a 3rd party auto
appraiser if he wants to. Much better to have an UNDERALLOWANCE situation
than the other way around. At least, using Kelly Blue Book will take the
overallowance gimmick out of the equation. And NO ALLOWANCES for an old
tick tocker pocket watch that doesn't work, either or any other scheme to
defeat anti-cheating laws. Dealers shape up or be bowled over by the Better
Business Bureau. The Prudential mutual fund guy faces up to 640 years in
the pen, if the SEC gets its way, so listen up.

 

I'm not sure about all this. ISTM that all the dealer is really allowing
for the trade is the difference between the discount without a trade at
all and the "trade-in allowance." IOW, trade-in allowances are usually
bogus, but not in the way you mean.

The way to find out what the dealer is really allowing for the trade is
to negotiate a "no-trade price" first, then ask, "and how much if I
trade in this <insert description here> after all?"

And if the dealer gives a discount without a trade, the State is also
being "robbed" of the ST on that discount. If you are so eager to
maximize the State's income, you could ban discounts on cars altogether.

-=-
Alan

 

|
| You have hit the nail on the head, Richard! The dealer who gives you say
| $3000 trade in on any car whether you drive it in or push it in is
cheating
| everybody.
|
| He cheats the State. Say a buyer has a wrecker that isn't worth a pile of
| manure. He tows it in and gets a $3000 trade in allowance. That $3000
| comes off the sales price. Thats 8% less sales tax on $3,000. Thats a big
| loss to the State coffers. That is going to have to made up somewhere.
| Some poor person is going to pay more for cigarettes on account of that.
|
| He cheats another buyer. Say another buyer has a trade that REALLY IS
WORTH
| $3000. $3,000 is ALL he going to get from this shyster dealer. He's been
| cheated because the other buyer got $3,000 for a wrecker that wasn't worth
| a pile of horse manure; he was out nothing. Our buyer here is out a good
| used car.
|
| He cheats the inlaws. My grandpa had this here '39 Olds and offered to
| sell it to my old man because gramps was going to buy a new Caddy. The
car
| was worth about $400. When grampa got to the Caddy dealer, the dealer
told
| him he would give him $600 trade on a new '50 Caddy. Thats a $200
| OVERALLOWANCE! What do you think happened? Grandpa telephones pop and
| tells him if he wants the car, he has to cough up $600 now! What a gyp.
| Its the dealer's fault for playing those trade in games and cheating my
| daddy out of 200 bucks.
|
| It should be obvious that the whole concept of car trade in for a new
model
| contaminates any vestige of dealer ethics if there was ever any to start
| with. It is the seed of evil without doubt. There is only one cure. Trade
| in should be based on Kelly Blue Book as maximum allowable trade in. If a
| seller thinks his car is worth more, he should sell it himself on the open
| market. If a dealer thinks its worth less, he will have to come to
| agreement with the new car buyer who can bring in a 3rd party auto
| appraiser if he wants to. Much better to have an UNDERALLOWANCE situation
| than the other way around. At least, using Kelly Blue Book will take the
| overallowance gimmick out of the equation. And NO ALLOWANCES for an old
| tick tocker pocket watch that doesn't work, either or any other scheme to
| defeat anti-cheating laws. Dealers shape up or be bowled over by the
Better
| Business Bureau. The Prudential mutual fund guy faces up to 640 years in
| the pen, if the SEC gets its way, so listen up.
|

In Maryland the sales tax is paid based on the full MSRP (sticker price),
not on the price paid from dealing down and/or the deduction from the trade
in. So, at least in Maryland, this makes no difference in the tax paid. In
other words, everyone pays a 5% $1,000 tax for a $20,000 car regardless if
they actually paid $14,950 or $19,950.

 

That's utter nonsense. Offering a higher trade in "allowance" is just another
way of reducing the price of the car being sold. There aren't any laws against
how much somebody can pay to take your car off your hands. By your reasoning,
selling a car at $20,000 instead of the sticker price of $24495 is "cheating the
state." If you reduce the price on your home, you are "cheating the state." If
we buy lunch at McDonalds for $6.50 instead of at a downtown restaurant for
$46.25 we are "cheating the state" on that lost tax revenue. I guess we better
all buy some cars quick or we will be "cheating the state." After all, think of
the people that will have to spend more on their precious cigarettes because I am
not buying a car this year. Good grief.

 

Kind of reminds me of the sign that used to hang over the parts counter
at a local farm machinery supply company: "We cheat the other guy and
pass the savings on to you!".

Bill Putney
(to reply by e-mail, replace the last letter of the alphabet in my
address with "x")

 

Usually when you trade in, it is harder to squeeze money out of them
elsewhere in the sale. This is especially true if they are overly generous
with the trade.

As I recall: here you pay tax on MSRP then the discounts and trade-ins come
off, same as a mail in rebate. Also every time a car trades hands the new
owner has to pay tax on it (book value) to the RMV. So tax can be paid
several times on the same car. It can be hard to convince them "it's a gift"

But again by your logic, if I buy an SX 2.0 instead of a Pacifica I'm
cheating the gov't.

A buyer should know how much their car is worth before trading it in. They
should know if they could easily get more money elsewhere. If they willingly
take it at a much lower value it's their own fault. There are free tools
online to figure the trade-in value of a car.

Sow you're blaming other people for your father's and grandpa's
disagreements? You don't seem like the type to take responsibility. Same as
you say it's the dealers fault if the buyer trades in below value.

 

x-no-archive: yes

RMV? What's that? In our state, we pay sales tax of the actual transaction
(not on some fictitious MSRP price or somebody's "blue book price") to the
state's Department of Revenue (DOR). The DMV passes the transaction info on to
the DOR so they know how much sales tax is due. We used to pay tax on rebates,
however this is no longer the case IF the rebate is applied at time of sale.

I agree with the rest of your post.

 

Registry of Motor Vehicles.

I could be wrong, but failing that I think they get suspicious if it
deviates to far from the MSRP or blue book price,eg: selling a 2 year old
car for $20.

 

| Nomen Nescio wrote:
|
| > You have hit the nail on the head, Richard! The dealer who gives you
say
| > $3000 trade in on any car whether you drive it in or push it in is
cheating
| > everybody.
| >
| > He cheats the State. Say a buyer has a wrecker that isn't worth a pile
of
| > manure. He tows it in and gets a $3000 trade in allowance. That $3000
| > comes off the sales price. Thats 8% less sales tax on $3,000. Thats a
big
| > loss to the State coffers. That is going to have to made up somewhere.
| > Some poor person is going to pay more for cigarettes on account of that.
|
| That's utter nonsense. Offering a higher trade in "allowance" is just
another
| way of reducing the price of the car being sold. There aren't any laws
against
| how much somebody can pay to take your car off your hands. By your
reasoning,
| selling a car at $20,000 instead of the sticker price of $24495 is
"cheating the
| state." If you reduce the price on your home, you are "cheating the
state." If
| we buy lunch at McDonalds for $6.50 instead of at a downtown restaurant
for
| $46.25 we are "cheating the state" on that lost tax revenue. I guess we
better
| all buy some cars quick or we will be "cheating the state." After all,
think of
| the people that will have to spend more on their precious cigarettes
because I am
| not buying a car this year. Good grief.
|

Nomen must be a Liberal...they believe every penny earned and spent should
go to "the state". Wait, how could one spend what one has given to "the
state"!?

 

Richard, my apologies I didn't see your last post, yes your exactly right.

Woman Nabisco - what the hell is wrong with you? Where do you think
that Kelly Blue Book gets it's prices on used vehicles from? Dealer used
car
sales and trade in allowances! Then they use some hocus pocus to try to
figure
out what the private
party value is, which boils down to just guessing. You might also consider
that KBB determines different prices for "fair", "good", "excellent" and so
on
vehicles, and that those labels are extremely subjective - what is good at
one dealer is fair at another. Using KBB to establish a fixed price is
rediculous,
not even the dealers do that. All it's used for is to put you within 10-20%
of the
actual value of the vehicle.

Ted

 

I've never purchased a new car from the dealer at anywhere near the MSRP.
Unless you're purchasing a Saturn or some super new model that is just flying
off the showroom, why would anybody do that? The MSRP is just a fictitious
magic number to make it appear that buyers are "saving" x amount less than the
MSRP when they purchase their car.

The blue book price is likely to be closer to reality, but keep in mind their
are two books, one for consumers and one (orange) for car dealers and banks.
Still the price that one is willing to buy a car for can deviate quite a bit
from this price, depending on any number of factors. (Need of cash now, dents
in the car, accident history, replacement car to buy is ready, etc.)

 

I hope no one purchases a car at the MSRP.

Let me rephrase that, if you sell a used 2003 Caravan, and say it was sold
for $20 (for tax purposes) I don't think they would buy that number. .It
would have to be somewhere approximately close to what the war is worth
(even $5K would be better). This would of course only be applicable to my
jurisdiction and may differ. That being said, my original point is that tax
could be collected several times on the same vehicle over its life.

 

When you buy a car, just get the best deal you can regardless of trade in.
Don't worry about cheating the government. Do you think the government cares
when they cheat you? I don't know the average screw ratio is
government:average joe 10 to 1? Any one else?

Also, remember this when voting: Don't necessarily vote for the most
promising candidate, vote for the candidate who will screw you the least.
You will be screwed no matter what.

I must be in jail by your standards. I don't smoke - $0 tobacco tax, I cut
down on drinking - less booze tax. I live 10 km from work - very little gas
consumption = little gas tax. Clothes for the kids - second hand - no goods
tax. Oh yea, I'm a real cheat.

 

And don't forget the lotteries - the tax on people who are very bad at
math (or as some call it, a "stupid" tax).

All across the land, the public was hoodwinked into accepting the
lottery based substantially on the projected profits going to things
like parks and recreation and fire departments. So the lottery gets
voted in, and what do the politicians do? They reason "Hey - look at
the extra money going to parks and recreation and fire departments that
they weren't getting in previous years. That money wasn't going there
before, so we can cut the budgets for those items by the same amount and
use that same money in our general fund!" And of course the marketers
of the lotteries (and likely the politicians too) knew ahead of time
that would happen, but successfully used it to get the legislation
passed.

So, bottom line: If you're not regularly playing the lottery, you're
also cheating the state.

Bill Putney
(to reply by e-mail, replace the last letter of the alphabet in my
address with "x")

 

Or what they did in Oregon - the lottery got voted in with 100% of
revenues earmarked for "economic development" such as incentives
to get companies to move into depressed regions of the state. This was
back during the last bad recession.

So of course, today once again we are in a bad recession and of course
the lottery funds are now all going into the general fund. Although that
might be better because the history of the economic development funding
is basically one of a huge load of pork barrel projects. Some of the
companies
in fact, such as Symantec, took huge incentives to move into Eugene, then
a couple years later when the economy got bad they simply paid the
incentives
back to the state (since it was before the end of the time period they were
supposed to be there for) and pulled out. So much for the economic
development.

Ted