Is sales tax included in the balance of a car loan?

I know that sales tax can get rather expensive on a new car, and I don't know if I have the cash for both a down payment and the tax. Is sales tax rolled into the car loan? Or do I have to pay it with cash?

Answer
If you purchase the car from a dealer (whether new or used), your sales tax and related fees are almost always included in the balance of the car loan. This is because sales tax is part of the dealer’s invoice or buyer’s order.
If you want to pay cash for sales tax and fees separately, make your desire to do so clear before you sign the loan.
If you’re financing a car from a private seller, you’re more likely to have to pay the taxes out of pocket. Typically you’ll pay these taxes when you go to retitle the car at the DMV. However, some lenders may allow you to roll this into your loan if you ask.
Remember that rolling sales tax into your loan means you’ll have to pay interest on it for the duration of the loan term. Therefore, you can save money by paying cash for taxes upfront (if possible). Still, most people who finance vehicles tend to roll these fees into their regular loan payments.
The last step to think about is insurance-related expenses. Nearly every lender requires full coverage car insurance on a car loan, so budget accordingly. To find the best price, Jerry can help you compare dozens of competitive quotes in minutes.
Eric Schad
Answered on Nov 15, 2021
Eric Schad has been a freelance writer for nearly a decade, as well as an SEO specialist and editor for the past five years. Before getting behind the keyboard, he worked in the finance and music industries (the perfect combo). With a wide array of professional and personal experiences, he’s developed a knack for tone and branding across many different verticals. Away from the computer, Schad is a blues guitar shredder, crazed sports fan, and always down for a spontaneous trip anywhere around the globe.
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