As of October 1 of this year, the BC government has imposed changes to the sales tax on private sales of used vehicles.  Moving forwards, these rates will be calculates based on the wholesale or Black Book value of the vehicle, regardless of the price the seller has listed it at.

This means, if the set asking price is $15,000, however the vehicle’s Black Book value is $17,000, you will have to pay PST rates on the Black Book price, not the seller’s price.

When it comes to buying a used car at the wholesale value, there is another important issue that BC residents will need to be aware of. If you are paying the seller $15,000 for the vehicle, and you already know that the taxes will be based on the wholesale value, not the private sale price, you will also want to make sure that the vehicle is in good condition and is actually worth buying at that amount.

It isn’t uncommon for previously owned cars can be sold with damage that isn’t always made known to the buyer. Even if you know upfront about it’s condition, this means you may still be having to pay extra for additional repairs on top of everything else.

ICBC maintains that these changes have been set with the intention of saving money, while protecting the market against cases of fraud. That being said, this increase will have implications for car buyers, especially those with lower incomes, those perhaps, who are trying to shop around for an affordable deal on a used vehicle.

Additionally, the BC government has stated that it will be a rarity that a used car will go for lower than the wholesale price. That said, if this does happen, buyers are entitled to pay for a mechanic to appraise the actual value of the vehicle through an assessment of its current condition, and can then apply for a reduced sales tax payment.

However, this is yet another payment that you can expect to pay out of your own pocket. This again reinforces the importance of paying close attention to all of the costs that will associated with the purchase of your used vehicle, so that there aren’t any added surprised when it comes to the amount you will need to pay overall.

Insurance rates are also always a hot topic, as BC residents are already paying an awful lot to drive their cars.

The reality is that many BC residents rely significantly on the use of a vehicle for personal and professional use, and these increased sales tax rules will affect their livelihood – and their daily commute.

One bright spot in these days of rising car prices – new and used, is having the support of your insurance broker.

Your Leaders Insurance broker can help you navigate these changes and assist you in finding the most affordable and most appropriate car insurance for your personal and business needs.

Especially these days, when we can all benefit from saving a bit of extra money – your broker can be an excellent resource in helping you achieve this goal.