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Does it matter what kind of dealer incentive it is for an upside down car trade in?

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Established Member

Does it matter what kind of dealer incentive it is for an upside down car trade in?

 

 

Does the dealer incentive need to be of a specific kind (like cash back) or can it be any term they throw around so long as the amount offsets my loan?

 

I'm $3500 upside down and will be paying a down payment as well.

 

 

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Community Leader
Super Contributor

Re: Does it matter what kind of dealer incentive it is for an upside down car trade in?

Cash back is what you want. Do not mention down payment until you haggle your trade in. Make sure they don't include what they give on trade value, with what you should get off on your sales tax. Sometimes they'll throw that in to make it look as though they're giving you extra. You'll get that regardless of trade value.



My most prized tradeline.
Message 2 of 4
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Established Member

Re: Does it matter what kind of dealer incentive it is for an upside down car trade in?

thank you!

Message 3 of 4
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Senior Contributor

Re: Does it matter what kind of dealer incentive it is for an upside down car trade in?


@Gmood1 wrote:

Cash back is what you want. Do not mention down payment until you haggle your trade in. Make sure they don't include what they give on trade value, with what you should get off on your sales tax. Sometimes they'll throw that in to make it look as though they're giving you extra. You'll get that regardless of trade value.


This factor "credit for trade in" meaning net or gross sales price varies by state. Virginia specifically taxes trade value and cash down, but NOT discounts such as dealer incentives. Example: $40,000 list price, trade $10,000, dealer discount $2000 = net financed or sale price of $28,000 (some states will tax this number), Virginia will tax $38,000 giving credit only for the $2,000 cash discount. Yes I know there are other fees and costs added but I'm trying to use just gross or net sales price in this example.

 

VDOT = For the purposes of the Motor Vehicle Sales and Use Tax collection, gross sales price includes the dealer processing fee. The gross sales price is the vehicle price after the manufacturers' rebates or manufacturers' incentives. Gross sales price does not include any other price reductions, such as credit for trade-ins, unpaid liens or other unpaid credits.  https://www.dmv.virginia.gov/vehicles/#sut.asp

 

Check with your state DOT site to see how your state/city figure their share.

 

 

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