Even though Tax Day is over, that doesn’t mean that you should forget about your taxes, especially if you are or will be on the lookout for a new car in the near future. Below are a couple ways that you can potentially save yourself a chunk of change by keeping this year’s or next year’s taxes in mind.
Many new car buyers forget that there are extra expenses other than just the purchase of a car. In the state of Florida, aside from the cost the car, a buyer will also need to pay for the taxes, tag and title.
Florida state taxes on car purchases is 6%, and there could be an additional county tax depending on the county of the purchase. County taxes in Florida could add from .5% to 1.5% to the base tax. However, there are 11 counties that don’t have an additional county tax. Then there is the cost of the title, which is $77.25 for a new car. And finally, there is the cost of a license plate. Those that already have a license plate only have to pay $7.95 to transfer the license plate to the new car, but residents that need a new Florida license plate, will be charged a new registration fee of $225.
This is especially relevant to workers that don’t have a set salary, like private contractors, freelancers or people in the service industry. Knowing how much income you brought home over the year is probably the most important factor to determine what car payment you can actually afford.
Banks and finance professionals recommend that your monthly car payment does not exceed 16% of your monthly income. But if you don’t have a history of your financial income, determining your monthly car payment can be tricky. Since your income can vary from one month to another month, making a decision based on how successful you were one month, might leave you behind in another month.
The more you put towards your total down payment the lower your monthly finance payments. Most banks recommend that buyers put down at least 20% of the car’s value (which includes tax, tag, and title).
Looking for a new car? Consider buying a new vehicle that will give you a tax credit towards this year’s taxes. Currently, there are over 26 cars in the 2015 and 2016 model years that qualify for a federal tax credit and all of the available models drastically range in price, engine specs and brand. Many of the cars on the list are eligible for the total tax credit of up to $7,500.
NowCar has five vehicles that qualify for the $7,500 credit. Stay tuned we will also be getting three new cars eligible for a tax credit this fall: the 2017 Chrysler Pacifica, Mitsubishi Outlander PHEV, and Chevy Volt.