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I am trying to transfer ownership of a used vehicle between private parties. I applied for a loan from a credit union to pay the seller. I negotiated the deal and the seller agreed to an amount that is less than KBB value because it needs some light repairs. I have a repair estimate from a registered mechanic.

When I visited the bank to complete the auto loan and hand over the cheque to the seller, the bank insisted that they would base the vehicle transfer tax on KBB VALUE not on the BILL OF SALE price. The DMV website says that if I can present the cost of repairs from a registered mechanic then they can lower the tax.

Is it mandatory that I must pay the bank calculated tax for the car or can I pay it off at the DMV? If so, what steps should I take if the bank forces me to pay the tax to them and not the DMV?

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    What is your location. Even in the United States how car sales tax is treated may vary by state. Commented Aug 12, 2019 at 10:04
  • It is often the case that the sales tax is collected by the DMV when the vehicle title is signed over to you and you take the title to the DMV to have the car titled in your name. Matters are more complicated if the seller still has a loan outstanding on the car and so his bank is holding the title and will not release it till it has been paid off, and/or you have to report to the DMV that you are buying the car subject to a loan from your bank and so the DMV needs to send the new title to your bank and not to you, etc. Commented Aug 12, 2019 at 20:23

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