used trucks

Sales Tax on Used Cars in California

If you are interested in purchasing a used car in the state of California, then you should understand the associated car sales tax. Whether you are purchasing your used car, truck, SUV, or van from an auto auction in California, a dealership or a private seller, there will be a sales tax levied on the purchase. Here is what you need to know about sales tax on used cars in California.

What Is the Car Sales Tax in California?

The state sales tax on a car purchase in California is 7.5%. Therefore, you will be required to pay an additional 7.5% on top of the purchase price of the vehicle. Let’s say you are going to purchase a used truck from a dealership. The purchase price of the truck is $30,000. The sales tax will be 7.5% of the $30,000 price. That means that you will have to pay a total of $2,250. That brings the final purchase price of the used truck – including tax – to $3,225.

How to Calculate California Sales Tax on a Used Car

You can calculate the sales tax in California by multiplying the final purchase price by .075%. Going back to the example in the previous paragraph. You can take the purchase price of the used track at $30,000 and multiply that price by .075. The equation will look like the following:

$3,000 x .075 = $225

When is Sales Tax Exempt in California?

The following events are exempt from the sales tax on used cars in Cali:

You receive the vehicle as a gift from a relative such as a parent, spouse or child, grandparent/grandchild.
You buy the used car in another state and bring it into the state of California within 12 months.
You receive the vehicle in a divorce.
The vehicle was inherited
You receive the vehicle from an individual’s revocable trust.
A court judgement provided it to you

Car Sales Tax for Trade-Ins in California

If you are purchasing your used vehicle at a dealership, then there is a chance that you are trading in another vehicle. Therefore, you may be wondering if the trade-in value is subject to the 7,5% sales tax. The answer is that the trade-in value is not subject to sales tax.

As an example, let’s say you want to purchase a used SUV at a dealership for $50,000. You are trading in your current SUV which the dealership gives a value of $10,000. That means the taxable amount on your used SUV purchase is now $40,000.

Tax on Rebates & Dealer Incentives

There is no sales tax on dealer rebates and incentives. So, for example, if you are purchasing a new SUV for $60,000 with a $5,000 rebate. You will pay sales tax on the $55,000 sales tax. However, you don’t have to pay sales tax on the $5,000 rebate. This also applies to dealership incentives.

Used Car Sales Tax on Private Sales in California

If you are purchasing your vehicle from a private party in California, then you may wonder if you need to pay the sales tax on the purchase. The answer is that all used car purchases are subject to the 7.5% sales tax. This tax is payable to the California Department of Motor Vehicles. Ultimately, it is the buyer of the vehicle who needs to pay the sale tax.

Note that once you have purchased your vehicle from a private seller, you have 30 days to pay your sales tax to the California Department of Motor Vehicles.

Understanding Used Car Sales Tax in California

Because the purchase of a used vehicle is a large transaction, you should know the associated sales tax. Remember that sales tax applies to dealerships and private party transactions. Be sure to consider the possible 7.5% sales tax that you may have to pay during the purchasing process.

Online Car Auctions in California – Open to the Public

Online Auto Auctions Open to the Public in California

While visiting a car auction in California can be a lot of fun(even for first timers), there are also a few options to buy a used car online in California through an online car auction. Most are open to the public, but some may be for dealers only which would require a dealer’s license.

Online auctions in California tend to feature the same inventories that they offer to their in-person bidders that come to their auctions. These vehicles often are bank repos, car dealer trade-ins, private for-sale-by-owner cars, police impounds and government fleet surplus cars, and also abandoned tow vehicles. These are free public car auction sites with online auto auctions that allow public bidders. Car auctions online operate very similar to wholesale car auctions, but may feature both live auctions and auctions that occur over a period of time — such as a week or a month.

They will almost always make the VIN (vehicle identification number) known before you place a bid on the car. This number is important for you as it will allow you to research the history of the car online before you buy it. This allows you to know if the vehicle has ever been wrecked and also how many owners it has had and in which states it was registered. For instance, you may want to avoid cars from northern states that salt their roads in the winter as this can accelerate wear on a car’s frame and also promote rusting.

Southern California Online Auction (Open to the Public) – Auctions are on Saturdays and Sundays

Otay Auto Auction – Online Auction (Open to the Public) – Auctions are on Saturdays but you may view the vehicles for sale on Fridays

Brownfield Auto Auction – Online Auctions (Open to the Public) – Locations in San Diego, Stockton, and Oakland

eBay Motors – You can enter your zip code into their search form to find cars for sale near you. eBay tends to be more expensive than the cars you see at dedicated public auto auctions, but are worth a try if you are looking for a specific car or truck that is hard to find used elsewhere. It is also good for finding classic cars and certain rare cars at auction.

Tips for bidding at an online car auction

Research the cars you are interested in bidding on

This is very important. Most locations will give you plenty of photos of the auction cars for sale and also provide a VIN number. Use this to find out more about the car’s history online. Pay close attention to details in all of the photos provided, looking for any unannounced damaged for need for bodywork.

Do not hesitate to ask as many questions as you need prior to bidding

Do not be shy. If you are new to bidding in online car auctions, feel free to contact the auction location and ask as many questions as you need. They commonly receive first-time buyers and are eager to help you out anyway they can before you place a bid on a car. You can search auction cars for sale in California on auction sites, but be sure to check back frequently because they are often adding new vehicles for auction.

Be sure to read all the requirements before bidding

Certain documentation, such as a valid US driver’s license, are required in order to bid. Anything that is required up front will be plainly listed on the auctioneer’s website.

Online car auctions open to public bidders are a painless way of buying a car at an auction. It’s very important though to thoroughly research the cars you are interested in bidding on. Learn about their owner history and also make sure you look up the value at a few different sources. Most car auctions sell their cars as-is, without any warranty.

5 Tips For Buying a Used Car in California

Buying a used car may be one of the smartest decisions you take but it has plenty of possibilities and avenues of failure. Depending upon how you approach it, you can either end up with a car that saves you a lot of money at the very outset while also serving you for many trouble-free years or you could end up overpaying for a piece of junk that constantly breaks down and only gives you headaches all the time. Thankfully, it does not take a rocket scientist to figure out if a used car is worth buying.

Figure out your budget: Be sure to include the price of any minor repairs and also sales tax on used cars in California.

Make sure that there are no major visual blemishes: Even if it is a used car, you will probably end up driving it for a reasonable amount of time. This means that you will have to live with it on a daily basis. To ensure that you can drive it regularly and take it wherever you need to go, make sure that there are no major imperfections. Start with a visual examination of the exterior and check for dents and scratches. A used car will have a few. Make sure that they are minor and barely noticeable. Pay close attention to the paint job. Ensure that there is no flaking or discoloration as a bad paint job can be very expensive to fix. Once you are satisfied with the exterior move on to the interiors. Check the upholstery and all the different panels to make sure that nothing is loose as a rattling panel or a smelly upholstery is the last thing you would want in a car. Make sure that everything is to your liking and that you can make it your everyday transportation option without making major sacrifices.

Review the history of the vehicle: This is perhaps the most important step here. A car can look really good both from the inside and the outside but can still be hiding major defects that are difficult to detect and fix. Cars that have been in huge crashes can be restored to look like their old selves but can still be hiding major problems with the structure and in the chassis. This will make it really dangerous if you are in the unfortunate event of a crash. The car’s history will reveal all such issues and allow you to take a judgment call on whether you should invest in the car. This is not something that should be taken lightly as it concerns your health and well-being as well as the health and well-being of anyone who would end up traveling in the car with you. This will also reveal any persistent issues the car might have had in the past allowing you to get a good grasp of what you would be putting yourself into if you were to buy the car.

Do a test drive to ensure drivability: It goes without saying that this should be very much on the list of things you should do before buying a used car. This helps you to know a few things that are absolutely necessary knowledge before spending your money on the used car. First, it will give you a fair idea of the general condition of the engine. Any rattling or unseemly noises are a good indication of a faulty engine. It will also tell you how well it has been maintained. If it revs unevenly or the gears don’t shift properly then those are good pointers of a car that isn’t in good shape. It will also tell you how responsive the steering is and how well the pedals move. All these are absolutely critical to the drivability of a car and ensure that the car ticks off all these boxes. It doesn’t end there. A car maybe mechanically all right to drive but it should also feel right. If you do not enjoy riding the said car then it is best to look for other options.

Ensure that you are paying a fair price: Buyer’s remorse is one feeling no one should experience as it is one of the worst feelings you could have. Since there is no standardization of the value of used cars, the final price comes down to how well you can bargain. A good starting point would be to go online and check out the usual price a used version of the car that you are looking at sells for. Then look at the specific car and do a quick mental calculation of all the costs you would incur to get it into running condition. It could be anything from changing the brake pads to a full servicing. Factor all of these and see if the price the used car is being offered at is justified or not. If not try to negotiate a price that is more in range with your calculations and if the price is not reduced then look for other options as the last thing you want to do is overpay for a used car.

Have it inspected by a mechanic: This is also vital to ensure that the used car is not hiding any dirty secrets. Every used car will need some type of work done on it to make it “your” car. How much of this work is needed decides how good of a bargain it is. While you can get a fair idea of the general condition of the car, you need a mechanic to truly understand what you are getting yourself into. They can make a fair assessment of the various flaws on the car. Usually, this will cost you some money but it is minuscule compared to what you might have to spend if the car ends up having major issues. With a professional’s opinion you can rest easy that your decision was a wise one. You can also get a good idea of how much extra cost would be incurred allowing you to decide if it would fit into your budget or not.