Used car tax exemption in AR increases from $2,500 to $4,000

Published: Jan. 4, 2012 at 5:10 PM CST|Updated: Jan. 5, 2012 at 10:46 AM CST
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JONESBORO, AR (KAIT) - Effective this year, Arkansas residents who purchase a used vehicle for less than $4,000 are exempt from paying a sales tax.

Previously, the exemption applied to used motor vehicles that cost less than $2,500. The new law includes purchases of used cars, trailers and semi trailers.

Car Choice Owner Ray Osment said Arkansas residents who want to take advantage of the new tax exemption might want to put the breaks on their purchase. "I don't think it's going to help at all."

"In general what you're going to get for that kind of money is going to be hard to find something you really trust to be roadworthy," Osment said.

Osment said many of the trade-in vehicles at Car Choice are inspected and prepped for selling, but others are not.  "Let's say I sell you something with 200,000 miles and it tears up immediately, and the odds of that happening are pretty good, so we don't even sell this stuff to the public."

Act 753, which was approved March 29, 2011, targets Arkansas residents with low income. It states, "… if the total consideration for the sale of the new or used motor vehicle, trailer, or semi trailer is less than four thousand dollars ($4,000), no tax shall be due."

Honda service and parts manager Chris Garlinghouse understands the need for a calculated risk. "If it's something to go back and forth to work, there may be some things that you may not necessarily care about if they go wrong," he said. "If it's going to be like a family car, you might want to be a little bit more apt to making sure it's safe for your family."

Garlinghouse said maintaining older cars could cost just as much as the car itself. "They can range anywhere between $1,000 to even up to $4,000. It just depends on the make and model of the car."

"If the car wasn't maintained properly throughout its life before you purchased it, you could look at big repairs like internal engine damage, components that go inside the engine, transmission issues."

Osment said there are other viable options for purchasing an inexpensive car. "If you just watch the classified ads or Craigslist, and you can try to find an individual that wants to sell it. Maybe there's been a death or somebody older that's getting rid of a vehicle, that's obviously the best spot."

"A car auction is fine, but you really need to know what's going on to some of these public auctions. You need to really be there early and inspect it in the daylight."

Osment and Garlinghouse agree that any used car needs to be inspected by a mechanic before purchasing it.

"You need to take it, get it looked over let a mechanic inspect it, drive it. I'd recommend driving it for 15 minutes at least."

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