All set to buy a car in NJ? Check your paperwork twice before you transact! For instance, catch hold of the seller well ahead of time to get details pertaining to the bill of sale, vehicle title, as well as the odometer reading statement.
By and large, most of the dealers in NJ are careful about paperwork for you. In case a car is bought from a private seller, you have to be responsible for the same.
Types of fees and taxes you need to pay
In case you make up your mind to buy used car or vehicle in New Jersey from a dealership, you need to pay the state sales tax. This is applicable because the state, in this case, collects a sales tax. On the other hand, buying a car from a private party or from a reputed cash for car service site will not include sales tax. Rather, you will have to pay a use tax. Similarly, you have to pay a title transfer fee and a registration fee as well.
Before you plunge into the deal, make a mental note of the below points:
Used Car Sales tax
- As a buyer, during ownership transfer, you were supposed to pay 7% sales tax last year, on the price that you have already decided to pay for the car. Eg. – If the buying price of the vehicle was $5000, you have to multiply the price by 0.07 to obtain a tax rate of $350. This money has to be paid during titling and registration as sales tax.
- If yours is a special case and the vehicle is exempt, the title transfer fee is $60.
- As of January 1, 2018, the tax percentage has been reduced to 6.625% on the purchase price of a new or used vehicle. But the same was 6.875% in 2017 December.
NJ title transfer tax
- Within 10 working days of purchasing a car, you have to transfer the vehicle title in person at the local New Jersey MVC office.
- If you fail to do so, you have to bear a 25 dollar penalty price.
Read also:9 Top Tips To Buy A Used Car
How to transfer a title? It’s simple.
- You and seller should complete the title and sign at the back
- If needed, the seller will produce more documents
- Pay a small title transfer fee of $60
- Pay sales tax on the vehicle
What if the vehicle title is missing?
In that case, your seller has to request a duplicate title from the New Jersey MVC. This needs to be done before the vehicle is sold off to you.
Used cars come with warranties. Yet you may be asked to pay for a service agreement above and beyond the basic coverage. Pay for it only if it makes financial sense.
Credit Insurance Fee
Most car buyers finance credit insurance covers for car loans to pay off on time. Check with your seller and insurance provider to avoid paying double coverage.
Vehicle History Report Fee
You can order a vehicle history report (VHR). It has the entire history of the vehicle. If your seller refuses to provide the same, you can get it at a nominal fee.
Your dealership can guide you about DMV-related fees. Used car buyers will have to handle these payments on their own.
Apart from the above, there are some other forms of fees like dealership fee, advertising fee and trade in fee. These could be nominal amounts and pay for them only if they make more financial sense. Additionally, every state including NJ requires car insurance or a financial responsibility with regular payment history.
Before you pay these fees and taxes, get the exact tax rates from an authorized tax center or MVC. Your paperwork should be properly in place. In the end, you have to carry all the requisite documents and a few others to your nearest New Jersey Motor Vehicle Commission (MVC) office. That is where you can register your vehicle seamlessly after the payments are done. Make sure to clear all the fees on time. On then your license plates will be issued by the state.