14 Sep 08 Top Keywords You Need to Know Before Car Purchase (4)

Taxable Amount: The amount that is subjected to sales tax. This amount is equal to the “selling price” shown on the invoice with all options either requested by car shoppers or added by dealers. Keep in mind that if there is any rebate on the car, the “selling price” shown on the invoice would be the price before rebates since in some states, rebate is taxable.

Documentation fee, Credit inquiry fee:  Let’s save our time. Documentation fee, credit inquiry fee, Prep fee and all other fees are nothing but pure profit for dealers. For some regions, these kinds of fees could be as much as $900 or $1000. Do you really think dealers need $900 or $1000 to do your paperwork? In some States, state law caps doc fee so dealer could not charge more than certain amount. For example, in New York, dealers could not charge more than $55 doc fee in car purchase. However, New Jersey, NY’s neighbor, it is not easy to find a dealer to charge doc fee less than $199, and some dealers even charge $399. Therefore, since documentation fee could be a major difference, in CarPriceDatabase.com database, doc fee is added into total amount when we calculate your CPD amount(will explain later), monthly payment, and car price. It gives a more accurate comparison between different quotes and prices.

Sales Tax: Sales tax is what needs to be paid to U.S government. Basically it is the taxable amount times the sales tax rate. Since it is the amount given to U.S. government, dealers do not play tricks on this. However, make sure dealers calculate the figure correctly. In some states, sales tax is capped to certain amount.

Gas Guzzler Tax: This tax was established in The Energy Tax Act in 1978 that if new cars sold do not meet EPA requirement are subjected to this tax, which is collected by IRS. Gas Guzzler Tax is determined by the combined EPA on your car, which is listed on your window sticker. The amount of the Gas Guzzler Tax is also listed on the window sticker. Keep it in mind that SUV/Trucks are exempted from Gas Guzzler tax according to the act.

GAS GUZZLER TAX
Combined EPA	Tax
Less than 22.5	No tax
More than 21.5, but less than 22.5	$1,000
More than 20.5, but less than 21.5	$1,300
More than 19.5, but less than 20.5	$1,700
More than 18.5, but less than 19.5	$2,100
More than 17.5, but less than 18.5	$2,600
More than 16.5, but less than 17.5	$3,000
More than 15.5, but less than 16.5	$3,700
More than 14.5, but less than 15.5	$4,500
More than 13.5, but less than 14.5	$5,400
More than 12.5, but less than 13.5	$6,400
less than 12.5	$7,700

Registration Fee: The fee is charged by state department of motor vehicles for your title (ownership) and license plate.

TTL: Title, Tax and Licensing. It is all the money given to U.S. government. Therefore, price before TTL is a good benchmark for the car price as it includes everything dealers try to make from you. Like mentioned earlier, dealer could charge you a huge amount of documentation fee but have a slightly cheaper car price. Price before TTL is very useful when comparing price with people in different area or with different registration and tax rate. Please be aware that TTL is not supposed to include dealer documentation fee. Some dealers might trick you by giving you a price before TTL but then tell you TTL includes dealer documentation fee.

OTD Price: Out-The-Door price. It is pretty straight forward that the amount represents the amount of money you need to pay to drive the car out your door. It includes both the money collected by dealers, selling price, all kinds of fees, options you either want or does not want, and TTL. OTD is very useful when you compare price with people in the same area as they need to pay for the same rate of sales tax, local tax and registration.

In general, there are only two kinds of money you need to pay for your car purchase. One part is paid to government, while the other is to be paid to dealers. Therefore, anything other than TTL is to be given to dealers.

VIN: Vehicle Identification Number. It is a unique serial number for each car. With this number, the history of the car, specification can be identified. Since it is unique, when you negotiate price with dealers, try to get the VIN from them as you could make sure they do not make any “mistake” to quote you the wrong trim or even model. Besides, you could use that VIN to request insurance quote for a very accurate quote.

Tags: Car Buying Tips

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