Used Car question, does dealer need to pay tax on car auction?

Question

Hi, I am trying to buy a used car from a user car dealer.
I went online and found out the dealer bought this car at auction for $30k, is I want to offer him $31 or $32k for it, but does he need to pay sales tax when he bought the car? does that mean I will at least offer him like $34k or $35k since he paid sales tax when he bought the car?
please help~~~~

I am in California, Orange County

Of course, I am willing to give dealer some profits, but I think $5000 its too much, I am probably going to try to cut it down to $1000-$2000 since it is a small dealership

This car is for sell for about 5k under the KBB value because it is a factory buy back car (lemon car). and he told me $5k discount is good price since there is really nothing wrong with it. If he bought this car at auction, is it possible that he DID NOT know it was a lemon when he bought it? so maybe the car actually worth alot less than $30k? How much discount should I ask if a non-lemon car sell for $35k, should lemon same car sold for $30k? or way less?
Please let me know, Thanks.
I also think he trying to make $5k on this lemon car is too much....

Answer 1

Dealers don't pay tax on vehicles they purchase for resale. If they buy one for use in the business they're supposed to pay sales tax though most of them just slap a dealer tag on them and use them without paying the tax.

Used cars are the cash cow for dealers. Markups of $5,000 are not unusual at all for late-model vehicles in good condition. A new car rarely has that much dealer profit built in, even at MSRP unless you're talking about something fairly high priced.

What the dealer paid for the car isn't necessarily what he has tied up in it. There may be transportation costs getting it to the dealership, cleanup and reconditioning, floorplan financing, etc. Dealers track every penny spent on a vehicle, you can count on that.

While you might start out offering him $1,000 over what he paid for it, he'll likely rebuff a lowball offer like that. What really matters is what the blue book value is. Many used car dealers won't sell anything for much less than blue book but if you're offering $4,000 below blue book retail he probably won't go for it. You'll just have to negotiate with him and see where it goes.

Answer 2

He does not have to pay sales tax if he is a licensed dealer, he will collect it from you.

How did you find out how much he paid. If you looked at some on line sources such as kbb, Edmund's, or Nada, you really have no clue what he paid.

Assuming he did pay 30k, i think a fair profit is 5%, plus the detailing 200, any dents, windsheild, tires, anything to make it ready for market, plus transportation. This can cost a couple grand. So take your 30 add 1500 plus 2000 plus 500 for trans and you get 34000, this would be the very least for a car of that price. But he's only making 1500.

Answer 3

Generally dealers don't pay sales taxes as these cars are for resale. So, everybody is making a reasonable profit by selling their cars. Also you can have some more details from chicago used cars dealers. Those dealers are good and will give you the proper information you need.

Answer 4

Dealer does not in most cases pay a sales tax, because it is for "resale".
But remember everyone is entitled to reasonable profit. Just how much that is any ones guess.
By the way the dealer had to transport it and even if he used his own transport, it costs money.

Answer 5

does your calculation include, a safety check, cleaning, licensing, and needed repair work?
no, just like everyone else you think car dealers and salespeople are all millionaires, jeez it's not a charitable organization,
we try to make 1000 - 1500 per car, of that the salesperson might make 250-300 , the rest goes to the dealer, who pays enormous insurance fees and keeps the lights on.


give us a break. would you work for 250 a week, no you wouldn't be able to afford that 35,000 car, would you

Answer 6

Any item bought by anyone in business, for the purpose of resale, is allowed to make the purchase free of tax with a tax resale certificate issued by their state, with the understanding that when the item is sold by that person or entity, he is required to charge the appropriate about of sales tax and pay it to the state.

Individuals, who are not acting as a business, are either required to pay the tax when they buy the vehicle, or in some states such as Florida, pay the sales tax to the tax collector when they register the vehicle.

Answer 7

does a dealer pay taxes when he sales a car? if so how?