09-09-2017, 05:18 PM | #1 |
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Courtesy Trade..Need Help
I'm looking at purchasing an X5 from a private individual.
He wants to do a courtesy trade at the BMW dealer to receive a tax savings. Do you think this is O.K. ? Is this safe to do? Oh, forgot to mention this is an out of state transaction. Fly in and drive home. Thanks everyone |
09-09-2017, 09:05 PM | #2 | |
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09-11-2017, 05:56 AM | #4 |
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The courtesy trade adds a lot of additional costs.
Before selling a vehicle, a dealer usually has to complete a vehicle inspection to ensure the car is in safe, running condition to avoid liability for repairs after the purchase. The dealer will likely charge for this inspection or any repairs it needs to make, which can alter your original selling price. The dealer also charges the buyer all applicable state and motor vehicle fees. Because the dealer must apply for and receive the title before transferring it, the process may take longer than you expected. |
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09-11-2017, 06:04 AM | #5 |
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Can u explain what a courtery trade involves/means?
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09-11-2017, 06:56 AM | #6 |
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A courtesy trade for a car exists when you arrange to sell your vehicle but trade it to a dealership for a tax deduction and arrange for the buyer to purchase from the dealer instead.
Not many dealers are excited to do this due to the risks associated with the trade. |
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09-11-2017, 11:06 AM | #7 |
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I've done this several times as well, the last time in March. I was able to sell my car, privately, for almost $3000 more than what the dealer would offer as a trade. Years ago, dealers would do it for free, in order to get the new sale but not any more, with margins being slimmer and the increased legal exposure.
That being said, the last two times I did it, as the seller of the used vehicle and buyer of the new, the dealer charged $100 to give it a once over so they were comfortable "selling" my used car. I paid for this out of the proceeds of my sale so as to not incur additional cost on the buyer. From my perspective, since he was willing to accommodate my courtesy trade request to save on taxes, I felt I should do that. In my opinion, you should expect the same, the seller should cover that cost if the dealer does charge. Aside from that, your fees, etc. should be no different than if you were to walk in and by the car without the pre-arranged courtesy trade. The state to state thing will have its own costs and paperwork but again, that's outside the courtesy trade consideration. It would be no different than if it sat on their lot for a month and then you decided to buy it. To make this easier for the buyer, I arranged to go to the dealer about two hours before I told him to arrive. I handled the paperwork with the back office and they just took $100 out of my trade equity to cover the shop to "OK" it. It was snowing that day and they even ran it through the car wash for the buyer. He showed up as everything was wrapped up and bought it just like any other buyer would. The only "extra" cost he really incurred was that the dealer charges a bit more for their doc fees than a notary typically would for a private party sale, maybe $75. If he'd complained or made it a condition of the sale, I would have covered the difference there as well. But he didn't. I end up getting more for my trade *and* save on taxes. The state to state thing, as you're probably aware, will result in a bit of extra cost as you'll need a temp or in-transit tag, pay for title transfer in the selling state, and then yours when you get home. Like I said though... that's not really part of a courtesy trade; that's the case for any out-of-state purchase. As far as the time required to transfer the title, that's never been an issue for me or others I've walked through doing this. The selling dealer has you sign those typical POA forms in order for them transfer the title that day. They've never had to wait for a physical title to be issued in their name, at least in my experience in OH, PA and WV. If the seller owes money on the car, the dealer will pay off the lien and the title will be issued to them. They then mail it to you. You then take it to your local notary, DMV, whatever and get a title issued in your state, register it and get it inspected, if applicable. This is also why you need temp/in-transit tags good for 30 days or so from the selling state. So you can drive it until you get the paperwork sorted out. I've been on the buying end of these deals as well. In fact, I once advised a seller to do this, to save on taxes, and in return he lowered the selling price by 1/2 the tax savings, as he was unaware of courtesy trades. |
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09-11-2017, 07:27 PM | #9 |
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No problem. The benefit to this is almost all on the seller's side so, in my opinion, he should be accommodating and minimize any extra expense incurred. He's realizing both a tax savings and probably getting more selling to you than they offered him on trade. Depending on the price of the car you're buying and the one he's buying, he could be netting a benefit of $3000, $5000 or more. Because of that, he should make it convenient and at no extra expense to you than you'd pay otherwise. I even covered the doc fees in addition to the inspection for my buyer once in the past. When you're realizing thousands in savings by doing it this way, it doesn't hurt to be nice to your buyer for agreeing to the courtesy trade request. I did have one guy think it was some sort of elaborate scam and it took some explaining, and he called the dealer's F&I to make sure it was on the up and up but... at the end of the day it worked out. Oh yeah... some dealers call it an in-and-out, as well.
Last edited by amgraham; 09-11-2017 at 07:28 PM.. Reason: Added info |
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09-11-2017, 07:37 PM | #10 |
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It should be a bit of a win/win/win - the seller gets more than trade value, plus the sales tax benefit - you get a 3rd party price - the dealer gets a guaranteed sale (but probably less profit).
So, the seller is really benefiting the most and should be overly accommodating and cover any additional expenses - the dealer is really doing them a favor and really would only do it to close the sale (on both the new car, and a used one). As the buyer, you would be largely indifferent, unless the dealer can offer CPO at a reasonable price. |
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09-24-2017, 06:50 AM | #11 |
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Just wanted to let everyone know that the courtesy trade went great.
I arrived at the dealership and they had all the paper work completed. They did add an additional fee for the paper work , but my seller covered that. All in all not a bad transaction. Thanks to everyone who responded back to my inquiry. |
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