When people are shopping for a new car, they know to budget in factors like the car’s price and registration fees. However, they sometimes to forget to consider all of the relevant taxes they may have to pay as well. Depending on the cost of the car, these taxes can be quite substantial and can really impact how far your budget goes. As car sales experts, we know the ins and outs of car transactions in New Jersey and will give you a run down of all the taxes you can expect to pay when buying a used car in NJ.

NJ Vehicle Taxes

Every motor vehicle sold is subject to the New Jersey Sales and Use Tax, meaning that if you buy a car, you have to pay a 6.625% tax on top of its purchase price. However, what counts as a motor vehicle has a particular definition. That definition being: vehicles with a motor that are operated on a public highway. That means affected vehicles are cars, motorcycles, and campers. The auto tax does not apply to vehicles like snowmobiles, lawn tractors, and all-terrain vehicles although a sales tax will apply.

When Does The Auto Tax Apply

The NJ auto tax applies to most car transactions. It applies whenever you buy a vehicle and any of the following is also true:

-You’re a New Jersey resident

-You have a home in New Jersey

-You own a business in New Jersey

-The vehicle will be used for business purposes in NJ

There are a number of situations where the auto tax won’t apply however. The transaction will be exempt from the tax if:

-The vehicle was a gift

-If the purchaser is a non-resident and owns no homes in NJ

-The buyer is recognized as a Foreign Diplomat

-The purchasing organization has an Exempt Organization Certificate

-The buyer claims the car will be used in a way that makes it exempt

Taxes When Buying A Car

There are a number of other taxable transactions you might encounter when buying a car beyond the auto tax applied to the vehicle purchase. Taxes apply in a bunch of ways you might not have thought of. If the dealership charges a documentary fee for the administration of purchase documents that cost is taxable.

The extended warranty is also subject to taxes. This is because the services included in the warranty, things like maintenance and repairs, are taxable. This is true whether those taxable services are ever performed or not because it’s an agreement that they will be performed.

Can Leased Vehicles Be Taxed

You also need to pay taxes on a car that’s being leased, unless you have some sort of exemption. In this case, the dealership you’re leasing from is responsible for paying the tax on the transaction. They then must decide on their own how to collect the tax amount. When leasing, fees like bank fees or acquisition fees are also taxable because they are considered to be part of the purchase price.

Whatever kind of purchase you’re looking to make, be sure to factor in the added tax costs to make sure you’re budget will go as far as you think.

If you’re still trying to find the right used Porche in New Jersey be sure to shop at Royal Motors Inc. for the best deals in NJ! We accept all trades regardless of condition and with bank financing starting at 2.89% we’re able to accommodate most credit needs. Speak to our friendly team of experts at (856) 346-2121 or visit our location in Voorhees, NJ today!