Financing question

[bshovers]

I'm getting close to buying a car out of state. I talked with a credit union and got quoted and what not. They said most likely they would issue a cashiers check. They said they would need the purchase agreement from the seller. Could I have the seller put a small about on the purchase agreement and have the credit union still finance the needed amount? If the price on the purchase agreement is small is that a way to avoid sales tax?

[TheFinanceGuy]

Hi,

Your end goal is to avoid sales tax by having the seller put a small amount on the purchase and sales agreement? I just want to make sure I understand correctly.

The short answer- it probably won't work. Most local governments caught on to this and started calculating tax on private party sales based on the NADA value of the car. For example, I bought my E39 for less than $4k- book value was $5,420. I paid tax based on $5,420.

The next part of your question- your credit union will most likely only issue you a check based on the purchase and sales agreement, or the value of the car. The second part depends on your lender. So, if you P&S says $9,500, chances are they will only finance you the $9,500. Some lenders will also finance you the sales tax and registration amounts as well.

Hope this helps. This is in my experience. Things could be a bit different where you are.

[slater]

honesty is the best policy!

[NoVAphotog]

I'm getting close to buying a car out of state. I talked with a credit union and got quoted and what not. They said most likely they would issue a cashiers check. They said they would need the purchase agreement from the seller. Could I have the seller put a small about on the purchase agreement and have the credit union still finance the needed amount? If the price on the purchase agreement is small is that a way to avoid sales tax?

The nice thing about ZHP's is that the book value's don't really factor in the "enthusiast market price"...so it shouldn't take much to put down a number that is closer to the NADA/KBB to save some on the sales tax. I could be wrong, but I don't think the DMV here in VA know the difference between a regular 330i and one with the ZHP.

[bshovers]

Hi,

Your end goal is to avoid sales tax by having the seller put a small amount on the purchase and sales agreement? I just want to make sure I understand correctly.

The short answer- it probably won't work. Most local governments caught on to this and started calculating tax on private party sales based on the NADA value of the car. For example, I bought my E39 for less than $4k- book value was $5,420. I paid tax based on $5,420.

The next part of your question- your credit union will most likely only issue you a check based on the purchase and sales agreement, or the value of the car. The second part depends on your lender. So, if you P&S says $9,500, chances are they will only finance you the $9,500. Some lenders will also finance you the sales tax and registration amounts as well.

Hope this helps. This is in my experience. Things could be a bit different where you are.


Thank you clarified some things. I was thinking that governments did catch on to that little scheme. Also I didn't know that some lenders finance the sales tax and registration. Going to bring this up when I go see them and see if I can work out a deal!

[johnrando]

I've seen this done in the past with no issues but I'm not sure how they do it today.

[bshovers]

The person who I spoke to was super nice at the credit union. Plus I'm a member at another credit union, this one just offers a better rate. So hopefully I can persuade them into doing something.

[BCS_ZHP]

If you do wrap the tax, title, tags into the loan, some credit unions then make you buy a "gap" insurance. "Gap" insurance ensures the loan is paid off if the car gets totaled and the car insurance settlement check is less than the loan balance. It's fairly cheap and covers both you & the credit union from being stuck with a residual amount should the car ever get totaled.

[bshovers]

nice info^^^

[danewilson77]

If you do wrap the tax, title, tags into the loan, some credit unions then make you buy a "gap" insurance. "Gap" insurance ensures the loan is paid off if the car gets totaled and the car insurance settlement check is less than the loan balance. It's fairly cheap and covers both you & the credit union from being stuck with a residual amount should the car ever get totaled.

Gap is money IMHO.

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[BCS_ZHP]

^Don't disagree DW, just wanted him to be aware of what "Gap" is in case the CU adds it to the transaction when he wraps T/T/T in the deal. Its only like $2-3 per month but I decline it too, always put enough down so it isn't needed.

[bshovers]

So the car I'm looking at needs a new re wrapped wheel for sure. I'll probably hold off on the seat cover. But for the wheel other than asking the seller to lower the price is there any way the lender can add that into my loan?

[TheFinanceGuy]

Lenders don't normally add the cost of repairs into a loan.

GAP is good insurance BTW- Unless you are in a spot where you have enough in your bank account cover the difference should something happen.

[danewilson77]

^Don't disagree DW, just wanted him to be aware of what "Gap" is in case the CU adds it to the transaction when he wraps T/T/T in the deal. Its only like $2-3 per month but I decline it too, always put enough down so it isn't needed.

Right. I didn't think you were disagreeing Bruce.

[johnrando]

Gap is good insurance, but I never do it. (Of course, I don't drive a ton).

[tkundhi]

bshovers

It all depends on your lender, what the book is on the car, what you are paying, and your personal situation. You can ask the lender to fund more than the sell price and depending on the factors I listed they may or may not do it.

Personally I don't do gap insurance. I'm confident my insurance company provides me adequate insurance in case of a total loss. I also don't finance the car for any significant length of time. I use the financing just to cover the time I need to sell another car.

Given ZHPs are a premium over regular 330i cars gap coverage may be wise for someone that is planning to finance the car for more than a couple months.

If you are financing, I would document the condition of the condition of the car very well. Print out the sellers ad. Take your own pictures after you get it home and cleaned up. Keep records. In the event of a loss these things will help you with the insurance company.

Good luck.

t.


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[bshovers]

Great info everyone thanks.


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