It varies by state.The buyer pays the sales tax, not the seller, so I don't see how "sales tax savings" is relevant - unless you mean that somehow the price of the trade-in is subtracted from the cost of the new car, so that you pay less on the new car? That's truly bizarre. And if it's true, I wonder whether that even saves you anything. IME, selling a car privately has always gotten me far more than selling it to a dealer (or Carvana etc) would have.I also had a really good car that I wanted to try to trade in because in my state there is a lot of sales tax savings when you trade in a car at a dealership that you do not get if you sell the car yourself. Getting a good price on the trade in was as important as the price of the new car.
In my state there is a 7% sales tax(called an ad valorem tax) so if you buy a $30k car for cash you would pay $2,100 in sales tax. If you had a $20,000 trade-in then you could only pay sales tax on the $10k difference, $700.
If I sold the $20k to someone else in a private sale then they would need to pay $1,400 in sales tax and I would need to pay $2,100 on the $30K car purchase.
Statistics: Posted by Watty — Fri Sep 12, 2025 11:57 am — Replies 23 — Views 1443