Should I pay off my loan?

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Hi everyone! I just placed an order for a 2022 Porsche 911 C2 and I wanted to ask if I should pay off my existing loan for my current truck 2021 Ram 1500 Limited which we will be selling once we take delivery of my 911 in May of this year. I didn’t lease the truck because it didn’t lease well so it was financed for 60 months. I also want to pay it off so I can get some room for financing my 911 and get a competitive interest rate.

My loan balance on the truck is around 48k and my monthly interest is 3.5% so around $150 per month. I currently have the cash to pay off the loan so I can save some interest for the next 5 months that I am keeping this truck. My question is, do I pay sales tax or any other fees when I pay off my loan? If the sales tax is more than what I would be saving for interest, I would prefer not to pay it off and keep the truck until I pick up my 911 and do a third-party sale through Vroom or Carvana since they will be paying sales taxes and not me.

This is probably a dumb question but I’ve always done third-party sales and never paid off my loan so the process is confusing for me. Would my situation be different if it was a lease instead of finance? I am curious. Thank you all!

Oh, and I am in North Carolina if that matters at all.

Financed or cash, you had already paid sales tax on the purchase. If anything, a portion of (or 100% of) the sales tax was included in your loan. Your bank paid your sales tax for you, plus whatever else was included. You simply just have to settle your debt with your bank.

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Gotcha, so the reason why Vroom and Carvana pay sales tax is that the sales price didn’t have any sales tax included. However, since my loan already had sales tax included when I first purchased the car, I am not charged a sales tax when I pay it off. I would also not be liable for sales tax when I sell to a third party later since I am the seller. Is that right?

Vroom and carvana don’t pay sales tax if they buy your vehicle

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The reason why vroom, carvana, or any dealer doesn’t pay sales tax when you sell them your car is because they are resellers. The sales tax will apply when they sell the car. Just as it did when you bought the car.

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Gotcha so who ever buys the car in the end gets the sales tax burden. I see, so it seems like nothing is holding me back from paying off my loan so I will go ahead and do that and sell it later! I am assuming if this was a lease it would be the same

A lease would be different, taxation varies by state. In CA you pay sales tax on the monthly payment. If you decided to pay off your lease you would have to pay sales tax on the payoff.

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If you are a savvy investor and can get a return higher than the interest you are paying by carrying the balance of the loan on the truck then do that.

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