Rob FTM

Clearly not advisable at the best of times but one question for you.

If the dealers offer, say, £10K, do they then have to sell for £11.750K i.e. do they have to pay VAT on the price they give you?

Or is this another ploy to try to dupe the unwary like me ?

I suspect the latter but slightly fear the former!

Thanks.

Rob.

Rosco

No they dont have to pay VAT on the price they purchase at. I've just traded in my Scoob for 14.5k and they are advertising it for 16k, so by the time they've been knocked down and they had to put new tyres on it, it only leaves about 1k gross profit.
Steve

blair

I think that second hand car dealers have a special VAT scheme where they only pay VAT on the margin they make.

Could be wrong but it rings a bell from my distant days of uni

MattN

you are correct, you only pay VAT on the margin.

It's called........... what for it...............

The Margin Scheme.

Basically the differnce between what they buy it for and what they sell it for. Repairs etc. cannot be deducted from the margin though.

The VAT has been paid by the first owner.

Shark

Just to confirm that VAT is on the margin. Dealers will oftern write the deal up in such a way to reduce the VAT. Ie, discount the new car you buy and overprice the trade in, hence reducing the margin on the used car. Makes no diffrence to you at the end of the day, because you can't get the VAT back, company or otherwise.

David

Dr Nick

Yes

You are only supposed to pay VAT once. So it would only be chargeable on the increase in price

However, if you are selling to a dealer, be prepared to have to pull your pants down and bend over

RickyD

Hi There!

My boss at work has recently traded in his Rover 214si 95N in against a 99V Micra 1.3Si.

The Si was up for £5500 & he got £3300 for the Rover. I think he did realy well as the Rover conked out on the way to the garage & it required a full de-coke which would have costed him £200+.

The garage now have his old car up for sale at £3999.

I think the garage has lost money on this one!

My comments about trading in car:

a) Most garages just look at the car & have a peek throught the drivers window at the mileage etc.

b) They usually or never take the car for a test drive

c) Never look at the service history

Why is this???

It seems crazy in my eyes.

Cheers

RickyD

Dr Nick

When I sold my Micra the garage actually took it for a test drive

I was gob smacked

Never had this happen before

They actually offered a good price but I got £300 more privately before the trade in date.

But In general I agree all the spotty kid usually does is look in his glasses guide. Its a case of no blame. Quote the number in the book and nobody gets their P45 at the end of the month.

MattN

rickyD,

yeah but what did the micra cost them? as long as get 3300 for the rover they've got full price for the micra.

as to why they don't check them out much, well IMO if it's a dud they can generally fix or cover up the problem quite cheaply - if not, goes to the auctions.

Also it's good to have new cars on the forecourt, makes you look like you shift a lot of cars - which makes people think they are either good cars or cheap or both!

Matt.