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Buying a Car –California Auto Sales Tax Law and Other Items You Need to Know

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If you’re new to California and you need to buy a car, there are a few things you need to know about California auto sales tax law as well as other items. Here are some things to think about before you buy a car in California.

There is no “cooling off” period in California on vehicles purchased from a dealer unless you get a contract cancellation option. These options are available on some used cars from dealers. Otherwise, you don’t have the 48 hour cancellation period that is available in many other states.

According to California auto sales tax law, the sales and use tax on a vehicle can vary by the city and county.

Vehicle purchases are taxed based on the city and county in which the purchaser registers the vehicle, and not on the county in which the vehicle is purchased. This negates the (perceived) advantage of purchasing a car in a "cheaper" county in order to save on sales tax. Many car buyers even consider going out of state to buy a car to save on sales tax. (For example, Oregon charges no sales tax on automobiles.) But, this won’t help you, because when you register the car, California auto sales law says you’ll be charged the tax then.

According to California auto sales tax law, the general sales tax on an automobile is 7.25% - the most recent rate hike happened in 2007. However, in some cities, the rate may be higher. In some cities, you’ll pay as much as two full percentage points over this amount, or 9.25%.

Any time a vehicle is bought, sold, gifted, inherited, or otherwise changes hands, the title will need to be transferred to the new owner.

When you buy a car in California from a private party, you have just ten days to apply for a title. You’ll do this at the DMV office. It’s wise to make an appointment, as the office can get very crowded. When you purchase a car from a dealer, the dealership will take care of all the titling paperwork for you. The title transfer fee is $15 and the title certificate is $16. If your title is lost or destroyed, you can get a replacement title for $16 as well.

Any time you move to a new state, you can expect there to be some differences in the laws and tax rates. Understanding California auto sales tax law and other California laws will help you make an informed decision when you purchase that new car.



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