Understanding Taxes and Fees When You Buy a Car with Patrick Hyundai
The excitement of buying a car at Patrick Hyundai can oftentimes overshadow some of the finer details in the process. No, we are not talking about what air freshener you should choose for your new ride, or the first song you should play when you pull off the sales lot. But we’re talking about taxes. Taxes are ever-important nowadays in the car world, especially in Illinois when compared to other places around the country. We at Patrick Hyundai felt that it would be important to give you a rundown of what to expect when you buy a car with us.
In Illinois, vehicle purchases account for some of the largest sales commonly made. Specifically, the state of Illinois collects 7.25% in state sales tax on the purchase of all vehicles. However, this number can fluctuate depending on the county you live in and can even increase based upon if you live in the City of Chicago or not!
The sales tax figure for any given county can fluctuate between 0.25% to 0.75 percent, and in addition to state and county tax, the City of Chicago has a 1.25% sales tax. Additionally, some dealerships even include additional fees such as documentary fee.
However, if you choose to lease a vehicle, you will only owe tax on your monthly payment rather than the total value of the vehicle. If you do end up choosing to purchase your vehicle at the end of the lease term you will pay a sales tax on the depreciated price of the vehicle itself.
If you choose to trade-in a vehicle, you pay tax on the reduced price. Example: If you were to trade in a Hyundai and receive a trade-in value of $5,000, then you buy a new car for $30,000, you would pay sales tax on the remaining $25,000 of the vehicle.
However, while Illinois sales tax usually applies to most transactions, there are certain items that get special treatment when it comes to sales tax. For example, in the state of Illinois, any rentals for a maximum of one year are subject to an automobile renting occupation and use tax.
Furthermore, in the state of Illinois, lessors are required to pay a use tax upon acquisition. This purported ease to nominal lessee can be subject to the retailers’ occupation tax.
For rebates and dealer incentives, Illinois taxes vehicle purchases before rebates or incentives are applied to the price. For example, if a dealer offers a $1,000 cash rebate on a $10,000 car, a buyer would pay taxes on the vehicle as it cost the full $10,000, even though the out of pocket cost to the buyer would be just $9,000.
Following the purchase of a vehicle, however, it’s important to note that there are a number of fees that Illinois car buyers may encounter. These can include $150 Illinois title fees, $151 registration fee for new plates or a $25 plate transfer fee if you transfer plates instead of getting new ones along with a possible electronic filing fee of $25.
On average, it’s important to note that new-car buyers pay about $99 in DMV fees. These fees include title, registration and plate fees.
When you come into Patrick Hyundai it’s important to be aware of these various taxes and possible fees, so that you are not taken off-guard when you see them during the purchase or lease of a vehicle. Our team works diligently to make sure that you know about everything that is in front of you. Feel free to contact us with any questions and our Patrick Hyundai team of financial experts will help get the financial side of things sorted out for you. We can also help you apply for financing to make sure you get the best deal.