Tax Fees for a Used Car in Indiana: Quick Tips for Budget-Conscious Decisions

Buying a used car comes with advantages like lower auto insurance rates, a more affordable price, and free installed equipment. Anyway, when planning a purchase, do not forget to calculate extra costs, like insurance and tax fees. Today, we prepared an overview of the fees in Indiana state that will apply to your purchase. 

Each pre-owned car on the market has an initial price, commonly referred to as the "sticker price." However, beyond this cost, you will have to pay several additional fees associated with finalizing your purchase, including:

• Sales tax. The amount varies from state to state and is specifically related to your place of residence. For instance, in Indiana, the sales tax stands at approximately 7% of your vehicle purchase. Therefore, when shopping for a used car, it's vital to factor in this rate to ensure that the chosen vehicle aligns with your budget.
• Title fees. This payment depends on the type of your title. Check the full chart here.  
• Registration fees. These fees cover the processing of your vehicle's paperwork and typically encompass a basic license for your car as well.

Note: While trade-in or dealer discounts are subtracted from the sales price, manufacturer discounts are not considered when calculating taxes.

If you buy a used car for commercial purposes, you may get a tax deduction. 

You may also get a tax credit if you buy a used electric car from an Indiana dealership.

• Insurance. In the United States, the cost of insurance can vary significantly depending on the state, driving record, and amount of coverage purchased. In 2024, the average insurance premium in Indiana is $1,400 per year, or about $116 per month. 
• Technical inspection. All vehicles from other states registered in Indiana, including those owned by new Indiana residents and vehicles assigned to a Hoosier on a manufacturer's certificate of origin, are required to undergo a vehicle inspection. The average car safety or VIN inspection costs less than $100. Most pre-purchase inspections will cost between $150 and $250. 
• Repair and maintenance. You'll have to spend money on car maintenance, from oil changes to tires and windshield wipers. If your car is out of warranty, unexpected repairs can cost thousands of dollars, plus the cost of towing the vehicle to a mechanic. If there is a warranty, you will be responsible for the cost of repairs after the warranty expires.
• Gas. If your car runs on gasoline, you will refill the tank. The price of gasoline rises and falls, but in 2024, it averages $3-4 per gallon in Indiana. 

A practical approach to factoring in taxes and fees when buying a used car in Indiana involves considering your initial down payment. This is the cash amount you pay at the time of purchase, often requiring a specific sum upfront.

As a general guideline, we recommend allocating approximately 10% to 20% of the car's value as a down payment. This sum should encompass all taxes, fees, and additional expenses, ensuring you stay close to the advertised price.

Providing a down payment within this range can yield long-term benefits. It assists in better planning for future payments, as neglecting to include taxes and fees in your auto loan may result in higher monthly payments than initially anticipated.

For any inquiries regarding the optimal management of taxes and fees, please do not hesitate to reach out to our finance team.