Used Mach E Value (Sale/Trade-in) Question

[moparguy]

Trade in values are down, the Mach E took one of the biggest hits, I am glad I sold my GT on time, Carvana lost $15000 selling my car 8 months later, I lease the current one and can return it at any time, I don't recommend trading the car unless you have to, good luck selling private party, 99% of the times, that won't work.

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[superdave80]

Funny thing about this: if you are in a negative equity situation, you don’t pay taxes on the private sale. Dealerships count on folks not being aware of this.

This must be a very specific state thing, because here in California, the seller does not pay the sales tax, so any loan you have is irrelevant.

And what your suggesting doesn't even make sense. If I have a $20k loan, and sell the car for $20,001k, I would owe sales tax on $20,001k. Yet if I sold it for $19,999 ($2 less), I would owe zero taxes?

 

[BigMach-E]

This must be a very specific state thing, because here in California, the seller does not pay the sales tax, so any loan you have is irrelevant.

And what your suggesting doesn't even make sense. If I have a $20k loan, and sell the car for $20,001k, I would owe sales tax on $20,001k. Yet if I sold it for $19,999 ($2 less), I would owe zero taxes?

No, what I’m getting at is that you don’t pay taxes on the gains if the are no gains. Pretty simple actually. What I am basically saying is that there are almost no circumstances where trading in a car to a dealer presents any sort of advantage, so people shouldn’t go this route.

 

[nvabill]

No, what I’m getting at is that you don’t pay taxes on the gains if there are no gains.

Ya think! Wow, I had no idea it works this way!

 

[Mach1E]

No, what I’m getting at is that you don’t pay taxes on the gains if the are no gains. Pretty simple actually. What I am basically saying is that there are almost no circumstances where trading in a car to a dealer presents any sort of advantage, so people shouldn’t go this route.

Now you’re talking about something entirely different (capital gains), which is almost never the case with a used car.

And that also has nothing to do with what you owe (being upside down) and who you sell it to (dealer vs private party).

Now I’m even more confused as to what you were originally alluding to.

And your last statement on this post is absolutely false (in some states).

In some states (like Florida), you don’t pay SALES tax on the value of your trade in.

Example- 25k trade in, 50k new car price, you only pay sales tax (7%) on $25k.

Trading it in saves you $1750 in sales tax. To break even on a private party sale, you’d have to sell it for $26,750.

Trading in is a definite advantage here. $1750 to be exact.

TLDR; Capital gains tax has nothing to do with being upside down on the car and who you sell it to.

Sales tax DOES matter who you sell it to.

 

[GreaseMonkey]

good luck selling private party, 99% of the times, that won't work.

I’m curious why you’re so down on the prospect of selling privately…and the super specific percentage failure rate

Care to share?

I’ve sold many cars privately and while of course it’s not for the faint of heart, it worked 100% of the time. The only times I traded to a dealer were when the trade-in value plus tax impact were higher than what private buyers offered.

 

[BigMach-E]

Now you’re talking about something entirely different (capital gains), which is almost never the case with a used car.

And that also has nothing to do with what you owe (being upside down) and who you sell it to (dealer vs private party).

Now I’m even more confused as to what you were originally alluding to.

And your last statement on this post is absolutely false (in some states).

In some states (like Florida), you don’t pay SALES tax on the value of your trade in.

Example- 25k trade in, 50k new car price, you only pay sales tax (7%) on $25k.

Trading it in saves you $1750 in sales tax. To break even on a private party sale, you’d have to sell it for $26,750.

Trading in is a definite advantage here. $1750 to be exact.

TLDR; Capital gains tax has nothing to do with being upside down on the car and who you sell it to.

Sales tax DOES matter who you sell it to.

Wait, okay, so maybe I’m confused. In California, hypothetically, if you trade in your car, the dealer values the trade in at 25k, you have a loan of 25k, the dealer just pays off your loan, and the car you are buying is like 40k, you pay sales tax of the 40k, or 15k (40-25)?

 

[generaltso]

Sales tax DOES matter who you sell it to.

Unless you live in a state like VT.

 

[generaltso]

Wait, okay, so maybe I’m confused. In California, hypothetically, if you trade in your car, the dealer values the trade in at 25k, you have a loan of 25k, the dealer just pays off your loan, and the car you are buying is like 40k, you pay sales tax of the 40k, or 15k (40-25)?

California doesn’t give any breaks on sales tax. You pay it all regardless.

 

[BigMach-E]

California doesn’t give any breaks on sales tax. You pay it all regardless.

That’s lame.

 

[Scooby24]

Wait, okay, so maybe I’m confused. In California, hypothetically, if you trade in your car, the dealer values the trade in at 25k, you have a loan of 25k, the dealer just pays off your loan, and the car you are buying is like 40k, you pay sales tax of the 40k, or 15k (40-25)?

Bolded for many states.

In Kansas, I trade in, I get this tax benefit. If I trade in a car worth 35k and buy another car worth 35k, I pay no sales tax.

But if I sell private party, I'm going to have to sell it for 10% more to net even...and that's not worth the hassle so to make it worth my time, I'd have to sell it outright for 20% higher than I could trade it in for to make any sense.

That's a big ask in many cases.

 

[Mach1E]

Wait, okay, so maybe I’m confused. In California, hypothetically, if you trade in your car, the dealer values the trade in at 25k, you have a loan of 25k, the dealer just pays off your loan, and the car you are buying is like 40k, you pay sales tax of the 40k, or 15k (40-25)?

Yes. Some states give you a credit on sales tax on trade in, some don’t.

But pretty sure none care about your pay off amount.

And again, capital gains has nothing to do with loan amount as well.

 

[ARK]

Trade in values are down, the Mach E took one of the biggest hits, I am glad I sold my GT on time, Carvana lost $15000 selling my car 8 months later, I lease the current one and can return it at any time, I don't recommend trading the car unless you have to, good luck selling private party, 99% of the times, that won't work.

Leases build in depreciation though, it’s no panacea unless the car company underestimates depreciation and they usually don’t, they often are aggressive on anticipated depreciation, and that’s also seen as part of the convenience of not having to deal with a car sale or possibly being stuck with a bad apple at the end of the lease.

In other words, it’s usually cheaper to buy a car and then sell it after three years versus lease a car and turn it in after three years. You will be net less out of pocket by buying/selling versus leasing/turning in.

So for example with the 2021 models, the Options residual depended on annual mileage selected and term of the de facto lease (3 or 4 years).

My Mach-E had an MSRP of $51,500. I chose a four year Options quasi-lease with 7,500 annual mileage. My balloon payment at the end, the equivalent to the residual, is 40% of the MSRP, i.e. about $20,600.

If my car is worth more than that in February 2025 and I turn in, I’ve given up equity. If the car is worth less than that, than Ford made a bad deal and I got off scot-free in not having to pay for that extra depreciation below $20,600.

Driveway gave me a $34,500 buyout offer on my 13,500 mileage Mach-E over the weekend, I don’t think it is likely to fall a further $14,000 in in the next year and a half - fingers crossed!

 

[Mach1E]

Leases build in depreciation though, it’s no panacea unless the car company underestimates depreciation and they usually don’t, they often are aggressive on anticipated depreciation, and that’s also seen as part of the convenience of not having to deal with a car sale or possibly being stuck with a bad apple at the end of the lease.

In other words, it’s usually cheaper to buy a car and then sell it after three years versus lease a car and turn it in after three years. You will be net less out of pocket by buying/selling versus leasing/turning in.

So for example with the 2021 models, the Options residual depended on annual mileage selected and term of the de facto lease (3 or 4 years).

My Mach-E had an MSRP of $51,500. I chose a four year Options quasi-lease with 7,500 annual mileage. My balloon payment at the end, the equivalent to the residual, is 40% of the MSRP, i.e. about $20,600.

If my car is worth more than that in February 2025 and I turn in, I’ve given up equity. If the car is worth less than that, than Ford made a bad deal and I got off scot-free in not having to pay for that extra depreciation below $20,600.

Driveway gave me a $34,500 buyout offer on my 13,500 mileage Mach-E over the weekend, I don’t think it is likely to fall a further $14,000 in in the next year and a half - fingers crossed!

Don’t forget that you can always buy the car at the end of the lease (or Ford options) if it’s worth more than the buyout (and then sell it right away for a profit).

If you do that, didn’t really matter if you bought or leased (assuming the interest rates were the same).

In the last few years, many people did this because the manufacturers overestimated depreciation.

 

[Tha_Ape]

Depending on the car, values have dropped a lot. EVs are getting better and cheaper (overall) year after year.

I recently sold a Prius Prime to carvana for 24k which is exactly what I paid for it back in 2019 (it was 2yrs old at the time). I jumped on the offer. I think that held value because there are a lot more people in the market for ~$25k cars and not everyone is ready to go full electric so the PHEV is a good way to get your feet wet and get most of the benefits from an EV (most of my trips were under 25mi...).

I didn't really need a new car but the idea of getting out of my car without a loss was too tempting.

That brings me to the next reason... people looking at EVs can't overlook the possibility of getting $7500 back like many on here did when they got their Mach E a year or 2 ago. You can get a Tesla Model Y for "dirt cheap" when you factor in cost cuts and that $7500. Now obviously that's likely not a car people on this forum consider, but your average car buyer will take that into heavy consideration. So they can get a new car with full warranty for a very competitive price.

It doesn't just hurt Mach-E owners, Tesla MY owners who paid top dollar in late 2022 before the price cuts / reintroduction of the $7500 got REALLY hosed. They easily lost $20k in value overnight.

So as bad as it might be for you, others are having it much worse

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