Traded in a car to get another car but didn’t get tax?

[Mallove27]

Jurisdiction

Minnesota

I went to a dealership and bought a used car in full. Seeing a better deal for another car online from the same dealership, I went in a day or two after to trade the newly bought car in for the other one. Everything was paid in full so there are no leases or anything.

During the trading-in process, the dealership subtracted the amount of the first car from the second car which was a few thousand dollars more expensive, but did not include the tax amount. When I asked about the tax I paid for the first car, which is over $11,000, they told me that the tax will not be applied to the new car to be subtracted from the amount claiming "the state wouldn't see it that way" so I had to pay another $11,000+ in tax for the second car.

I just need someone to break it down for me to see if I got scammed or not and what actions, if any, I can take? I feel as though I've been cheated out of my money.

 

[txls]

Call your local DMV.

 

[zddoodah]

$11k in tax?! What sort of tax?

Based on a quick google search, it appears that sales tax in Minnesota ranges between 6.875% and 8.375% At those rates, in order for $11k in sales tax to be generated, the purchase price would have to have been somewhere between $131,000-160,000.

In any event, you bought two different cars, so it would be expected that you paid sales tax on both purchases.

 

[army judge]

$11,000, they told me that the tax will not be applied to the new car to be subtracted from the amount claiming "the state wouldn't see it that way" so I had to pay another $11,000+ in tax for the second car.

.

Do you mean to say $1,100 as opposed to what you typed $11,000?

As suggested, ask your DMV, or state tax authorities; AFTER you visit the DEALERSHIP and respectfully request someone to EXPLAIN the entire transaction especially the MATH to you!

 

[mightymoose]

$1,100 is more likely.
It appears to me they are handling it correctly. You rushed into a decision and it ended up costing you.
When you trade in a car you trade the value of the car. The value does not include tax.
You are fortunate if they gave you the full trade value for the same amount you paid. They could easily have offered less. It seems they are trying to work with you, not scam you.

 

[txls]

It varies by state but most states do give credit for trade-ins. So for example if you paid
$30,000 for the second car, and they gave you $10,000 for the one you are trading, then your taxes would be based on $20,000 for the second transaction. So check the tax amount on the second transaction. The credit may be there but you're just not seeing it itemized.