Last post on Feb 23, 2013 at 8:53 AM
You are in the Smart Shopper
What is this discussion about?
#10 of 19 Re: Puerto Rico new car excise tax bite... Ouch! [tonyv1]
Sep 14, 2007 (9:50 am)
Well to tie up this saga, I did wind up buying the 2006 Kia Grand Sedona LX, with full new car warranty, in color silver, by phone, from AutoSuperstore in Ponce PR for $24K plus $250 for license plate, reg and minimum insurance. I qualified for a US bank 5% car loan for 60 months with $20K comprehensive gap insurance that will run me just under $500 per month. So apparently, you can overcome the PR auto excise tax bite if you catch the right liquidation sale on the right overstocked car. By all rights, if I had bought that same car in 2006, the MSRP was $23K. The excise tax would have been over 30%, so my retail price would have been about $30,000. Buying now saved me $6,000. I could have pushed my luck and tried to hold out longer, but there were only a few silver new 2006 Kia minivans left on the entire island and I didn't want to lose out to another buyer. I did have a local mechanic acquaintance check out the minivan before I closed the deal because 2006 Sedonas do have two recalls for brakes, hydraulics and electrical wiring problems. The mechanic cleared it and the Sedona awaits my arrival and usage. That's all folks!
#11 of 19 Re: Puerto Rico new car excise tax bite... Ouch! [tonyv1]
Sep 14, 2007 (4:03 pm)
OK.. it's not collusion on the financing, it's business. Do you think that Best Buy makes nothing off of their Best Buy cards?
5% is a killer rate, I assume that's a home equity loan, correct? If so, it's the cheapest way to finance because the interest is tax-deductible.
Generally any business that sells a product or service is going to make money on it, economics 101. I recall one customer that we had who showed up with their own financing "because we would just mark up the rate". It was through her local bank, First Union at 7.75%. I asked her if I could get her financing through First Union for 6.95% would she be interested? She couldn't believe that we could do it, I explained that we bought money from FU for about 6% and sold it for about 7%, and that their normal retail rate for their customers was 7.75 and people off the street it was 8-8.25%. I explained that we do mark up the rate, but was she better off paying us 7% and us making a comission, or was she better off dealing with First Union directly and paying more for the money?
We ended up using Chase with her because I got the rate down another half a point. Here's another example, Volvo Finance, at the end of the 1998 model year, offered unadvertised 0% finance for 36 months on S70 and V70 cars. The requirement was 40% of the MSRP as a down payment and Tier 1, 2 or 3 credit... even if you had a 660 becaon score, you qualified! We got a $200-300 flat fee per contract from Volvo Finance like every deal we did with them at the buy rate. We converted virtually every single cash customer into this program, and why wouldn't we? We made money and the customer got to borrow about $15-20,000 for free for 3 years. I told every cash customer that was planning on paying cash to take the money, throw it in a CD for 3 years and even at 5% on $15,000 they would make $2,250.
If I can sell you money cheaper than your own bank will and make money on it, how is that collusion or a kickback? It's neither. Collusion is when competitors fix prices, such as all Chevrolet dealers agreeing to sell cars for no less than $X, and it does happen but it's rare. A kickback is a bribe, a payment for doing something illegal or unethical.
#12 of 19 Re: Puerto Rico new car excise tax bite... Ouch! [im_brentwood]
Sep 14, 2007 (5:16 pm)
Point taken. As they say in the Godfather, it's not personal, it's business. I admitted I was naive to think banks didn't give kickbacks to car dealers. As for the 5% car loan, it actually is a car loan. But the low rate is offered by a credit union I belong to and requires a CD or other account to secure the loan as collateral. So I'm earning 6% on a 5-year CD, while paying 5% on a five year car loan. That's the kind of business I like. Thanks for your input.
#13 of 19 PR car excise tax didn't bite me after all
Sep 17, 2007 (9:01 am)
After going through all those commotions to deal with the 30% Puerto Rico excise tax on new cars, by mere chance I came across an internet ad on clasificadosonline.com over the weekend for a new silver 2007 Caravan SXT (not Grand Caravan) with 3.3 liter 170 HP engine and cruise control (no Stow N Go) and full lifetime powertrain warranty, for nearly $2K below invoice. I bought it cash for $20K and totally avoided the new car excise tax.
I don't know how because I called the PR tax department again to be sure and they told me the excise tax on that new car should be $6,200, But apparently when a dealer needs to make room for new inventory, they do whatever it takes to clear the lot and sidestep the tax, so I'm not looking this gift horse in the mouth.
I did have a mechanic check it out to make sure it's not a lemon, and he says it's an incredible bargain. He wants one to resell at a profit. So go figure, sometimes you just fall into dumb luck.
#14 of 19 Re: PR car excise tax didn't bite me after all [tonyv1]
Sep 18, 2007 (2:10 pm)
So now you have two cars in PR?
#15 of 19 Re: PR car excise tax didn't bite me after all [joel0622]
Sep 18, 2007 (2:33 pm)
Yes. He's becoming a dealer by default....
#16 of 19 Re: PR car excise tax didn't bite me after all [joel0622]
Sep 18, 2007 (6:24 pm)
Technically, I did buy two cars, a 2006 new? Kia Sedona LX for $24K on a car loan and a 2007 definitely new Caravan SXT for $20K cash. But I cancelled the Kia Sedona by falsely telling the Kia dealer my bank loan fell through. I had yet to take actual delivery of the Sedona although a mechanic did check it out for me at the dealership. So we had a verbal contract pending receipt of the loan paperwork, which I secretly cancelled with the bank when I saw the opportunity to get the Caravan online for $4K less. I jumped on it and held it with a credit card deposit.
It wasn't ethical. The Kia dealer cursed me out, but I didn't feel bad because he had previously pulled a switch on me. He told me he would sell me a 2007 new Kia Sedona LX at $24K, and when I agreed, he "corrected" himself to say he only had a new 2006 Sedona LX. So you live by the lie, you die by the lie.
I still don't understand why the Caravan dealer didn't charge the $6,200 excise tax on the new car, but that's the dealer's problem, not mine. It definitely came with the lifetime powertrain warranty in writing on the bill of sale.
For an extra $300, the Caravan dealer even drove the new car, with new plates and registration in my name, over 100 miles from Bayamon to Ponce to have my mechanic check it out because it seemed too good a deal to be true. But it was. The odometer read 108 miles, so it is a new car and got a nice break in drive.
My relative took the dealer to the local Banco Popular where I had wired enough funds for a cash deal. The Caravan is now in my new Puerto Rican home garage until I arrive next week. I also arranged online for full insurance coverage at a quarterly premium of $250 through Geico PR in case my new car gets stolen or damaged before I get down there.
I have test driven the 2007 Caravans and TCs in NYC, so I know what I bought. If I do want to add adjustable pedals or other minor options, the Ponce Dodge dealer told me I could do it anytime and he had no qualms about honoring my warranty even though I bought from another dealer because I did give him the chance to match the $20K price and he simply could not. He actually told me I would be a fool to pass it up, but to make sure it wasn't a problem car, which my mechanic did certify to me in writing via email.
As I wrote in my original post, I had wanted to wait for the 2008 TC LX or GC SXT, but the PR dealers were telling me the price was definitely going to be over $30K with the excise tax and they wouldn't even get inventory until next month, October, which in Puerto Rican time means "whenever." The classified ads there show dozens of 2006 models still being sold as new, so don't hold your breath waiting for 2008 models.
I do prefer the squared front styling of the 2008 models than the 2007 egg-shape. I also gave up Stow N Go, but the Caravan SXT seats do pull out completely when I really need all that cargo space on rare occassion. So I decided to save over $10K and have a new car awaitng me while there was still 2007 new inventory on sale in the colors I wanted.
End of story.
#17 of 19 Re: PR car excise tax didn't bite me after all [tonyv1]
Sep 19, 2007 (6:37 am)
One last note, I received an email copy of my new car auto insurance policy which I thought was to be underwritten by Geico PR. The policy is actually under CAICO, which sounds like GEICO. I don't know if this is a subsidiary of Geico in PR or what, but my PR relatives assure me it is a reliable insurer because they use it too. I just wanted to advise readers of this detail. In fact I used an online insurance broker and not the Geico website itself, so when we spoke by phone to conclude the deal, when he said Caico, I heard Geico. I'm sure this is no coincidence to take advantage of the similar names, but that's business. Buyer beware.
#18 of 19 Re: PR new car Excise tax lingo in Spanish [tonyv1]
Sep 25, 2007 (6:28 am)
A friend suggested I offer a basic Spanish translation for asking about the new car excise tax if you call the Puerto Tax Dept. at 787-774-1474 and 787-774-1463
The tax itself is called el arbitrio "arh-bee-tree-oh."
Therefore, to ask the tax on a new 2007 (dos mil siete) or 2008 (dos mil ocho) model you could say.
"Buenos dias. Cuanto es el arbitrio del dos mil siete auto del modelo Dodge Caravan
Ese Eckees Teh (SXT) , por favor?"
Don't forget "Gracias" after you get an answer.
It's very important to be extra polite in the Spanish language, especially if you are butchering the pronunciation.
After receiving my new 2007 Caravan SXT, I asked the dealer how he and I avoided paying the arbitrio, which I was told would be over $6K. He told me that as soon as he received new stock of 2008 Caravans, the 2007 technically became last year's model and exempt, at his option, from the excise tax, although it could still be "liquidated" as new with the full factory warranty.
So if you can wait till the usual Sept/Oct model turnover, that could be your best chance to avoid the new car excise tax.
The dealer also said shipping a used car to PR should not have to pay the new car excise tax, but may still have to pay a host of shipping, insurance and customs luxury taxes that can vary greatly from model to model.
#19 of 19 Vehicle Taxes?
Feb 23, 2013 (8:53 am)
Does anyone know how to calculate the approx. vehicle tax for an auto brought into PR? The car is a 2002 Corvette. Are there any military exemptions to the tax?