Buying a used car in North Carolina can be a great way to save some money, but there’s one thing you can’t ignore: the sales tax. The statewide rate for used car sales tax in the state of North Carolina is 3% of the vehicle’s purchase price. Not terrible, compared to other states like California with its 7.25% sales tax, but not nearly as good as zero, like Oregon has.
How do I pay NC car sales tax?
Can I avoid paying car tax in NC?
Is it better to go to a dealer?
What happens if I don’t pay sales tax on time?
We're about to spill the beans on North Carolina's used car sales taxes, and you don’t want to miss it.
Also, don’t forget to factor in registration fees and the costs of a title transfer in North Carolina.
Do You Pay Taxes When You Buy a Car From a Private Seller in North Carolina?
When buying a car from a private seller in North Carolina, you have to pay sales tax based on the vehicle's purchase price. All vehicle purchases are subject to a 3% sales tax, also known as the Highway Use Tax (HUT). It pays for maintaining and fixing state roads, and a portion of the money goes to the state’s General Fund and the North Carolina Highway Trust Fund.
The good news is: no local taxes are levied on top of the statewide rate. This means the HUT levies a flat-rate on all vehicle purchases—new or used—across the state of North Carolina. Things could be much worse if you’re a Californian looking to buy a motor vehicle because on top of the monster sales tax (7.25%), local counties and cities levy additional taxes. The combined sales tax rate in California can go as high as 10.25%. (Ouch.)
Other fees are involved with purchasing a car, such as registration fees and vehicle title fees. Buying a car in North Carolina will cost you (beyond the purchase price and sales tax):
- Certificate of title: $40
- Registration: $38.75–$86.25
- License plates: $10 (read our guide to North Carolina license plates cost)
- Plate transfer: $15
- Vehicle title transfer fee: $56
- Wake, Durham, or Orange County Regional Transportation Authority Registration Tax: $5
Out-of-State Car Registration Costs
To register an out-of-state vehicle in North Carolina, you'll need to submit the following to your closest North Carolina Department of Motor Vehicles (NCDMV):
- Vehicle title
- Completed title application
- Odometer disclosure statement (Form MVR-180)
- A North Carolina driver license or a valid out-of-state driver license with a North Carolina temporary driving certificate
- Proof of North Carolina vehicle insurance
How is Used Car Sales Tax Calculated in North Carolina?
In North Carolina, sales tax on used cars is calculated based on the vehicle's purchase price, which is determined on the basis of the car’s fair market value. If you’re buying the car from a private party, you must declare the car's fair market value to the North Carolina Department of Motor Vehicles and pay the appropriate amount of sales tax based on that value.
If the DMV suspects that the purchase price of the vehicle was artificially decreased, they will calculate sales tax based on the car’s fair market value. The DMV establishes what the car is worth on the open market by referring to the Kelley Blue Book or other reliable sources of information about used car prices. The North Carolina Department of Revenue can also use its own valuation guides and data sources to determine the value of vehicles for tax purposes. If the DMV concludes that the car's fair market value is greater than the selling price, the sales tax can be assessed based on the fair market value.
How to Pay North Carolina Vehicle Sales Tax
Here's how to pay car sales tax in North Carolina after buying a used car from a private seller:
- You and the seller must complete the necessary paperwork to transfer ownership of the vehicle, including the vehicle bill of sale (when you buy a car on PrivateAuto, we provide an official North Carolina bill of sale and prompt both of you to sign it in our app at the appropriate stage of the transaction process). To transfer vehicle ownership in North Carolina in a private transaction, you’ll need the following documents:
- The original car title with an odometer reading and the seller’s signature
- The buyer and the seller’s valid driver’s licenses or IDs
- Calculate the amount of sales tax you owe. In North Carolina, the sales tax amount for a car is determined by multiplying the price of the car by the current state sales tax rate. For example, if you buy a $10,000 car, the sales tax would be $300 ($10,000 times 0.03).
- Sign the title application (Form MVR-1). This form is used to ask for a certificate of title and registration in North Carolina.
- Submit payment for all taxes and fees.
- Register your vehicle. You will need to show proof of insurance, your driver's license or another form of identification, and a completed Application of a Registration Plate (Form MVR-330).
- Get your new registration and title. Once you've paid the sales tax and turned in the necessary paperwork, you'll get your new registration and title for the car. The title and registration will show that you bought the car and that the sales tax has been paid. You will also get new license plates.
If you buy a car in a state that levies no sales tax and register it in that same state, you won’t pay North Carolina sales tax if you later register it in North Carolina. If you immediately register your new-to-you car in North Carolina after purchasing it in another state, you’ll pay the North Carolina sales tax.
Can I Avoid Paying Sales Tax on a Car in North Carolina?
There’s no way around it: property taxes, income taxes, sales taxes, and other taxes are part of life. You are required by law to pay sales taxes on used cars in North Carolina unless you meet an exemption.
North Carolina Car Sales Tax Exemptions
Certain individuals and organizations are exempt from paying used car sales taxes. These tax exemptions only apply to sales taxes and not to other fees related to buying a used car, such as registration or title costs.
Here are some sales tax exemptions for used vehicle purchases in North Carolina:
- Military personnel stationed in North Carolina (but not residents of the state) are exempted from paying sales taxes. Handicapped veterans who have been certified by the VA as having a 100% permanent and total disability are also free from paying North Carolina sales taxes on used cars.
- Non-profit organizations that have been given tax-exempt status by the IRS are not subject to paying sales taxes on used cars in North Carolina.
- If the car is a gift, the sale may be tax-free. Similarly, when a car is transferred between spouses, parents and children, or stepparents and stepchildren, the recipient is exempt from the HUT (Form MVR-613).
Is Buying from a Dealer Better?
Many people think buying from car dealers is a great way to avoid hassle (and perhaps a fee here and there). In fact, when you go to a dealer, you end up paying more.
When you buy a car from a dealer, you pay all the same taxes and fees that you’d pay if you bought from a private seller. Dealers have a way of rolling it all up in the fine print, but the charges are still there.
Perhaps more significantly, nine times out of ten, you’ll pay more for a used vehicle when you buy it from a dealer, compared to buying the same vehicle from a private seller. That’s because dealers need to buy low and sell high to make a profit. Cut out the middleman and get the best price possible by transacting peer-to-peer on PrivateAuto.
Additionally, dealerships charge a "documentation fee" above and beyond all the other taxes and fees you have to pay. Since state law doesn’t place any limits on this fee, the documentation fee in the state of North Carolina can go as high as $550.
We do admit that dealers bring a certain amount of convenience that you don’t traditionally get when you buy from a private seller. In fact, that’s why PrivateAuto exists. We give you dealer-like convenience in the palm of your hand while allowing you to transact peer-to-peer with regular folks like yourself.
Avoid documentation fees and get lower prices when you shop used cars from private sellers right here on PrivateAuto.
What Happens if You Do Not Pay Your Car Taxes on Time?
If you don't pay your North Carolina car taxes on time, you might have to pay late fees. All tax assessments or additional taxes are subject to interest at the rate in effect from the date they were due until the date they were paid.
For taxes that are filed after the due date, you will be charged 5% of the net tax due for each month or part of a month that the tax is late, up to a maximum of 25% of the additional tax. If you file the sales tax with an extension, the late fee will be calculated from the date you file the tax, not from the date it was originally due.
In addition to late fees and interest, the NCDMV could charge you additional fees for driving your car with expired tags.
Avoid these problems and pay your car taxes on time. Read more about penalties and interest on the official North Carolina Department of Revenue (NCDOR) website.
Car Sales Tax Calculator
If you’re in the market for a used car, you need to figure out how much sales tax you owe. While you don’t have to be a rocket scientist to calculate taxes, it can be a hassle to get to the bottom of your total sales tax amount.
With PrivateAuto’s used car sales tax calculator, figuring out sales tax has never been easier. This free online tool makes it hassle-free to calculate how much tax you have to pay on a used car purchase based on where you live and the purchase price of the car.
With our car sales tax calculator, anyone can be a tax expert.
Buy and Sell Used Cars on PrivateAuto
Conduct private car transactions easily and safely with PrivateAuto. Our innovative platform connects buyers and sellers and gives them all the tools to complete the deal, from in-app financing to secure messaging to integrated payments.
PrivateAuto allows you to negotiate the price you want, schedule the test drive meetup, and pay for the car—all within our app without compromising your personal information.
Whether you want to buy a vehicle or are trying to sell your used vehicle for top dollar, PrivateAuto will help you get the deal done.
Get started with PrivateAuto today.
Here’s how you can sell your car in North Carolina with a few simple steps:
- Gather necessary documentation
You’ll need your vehicle title and other documentation. Have all the paperwork you need to sell your car privately, so you’re not scrambling to find it at the moment of completing a sale.
2. Register on PrivateAuto and get verified
To make PrivateAuto a safe place for everyone, we require email, phone, and driver’s license verification, including facial recognition.
3. List your car
Easily create your PrivateAuto listing with our step-by-step guide. Bonus: we include a window brochure with a QR code scannable to your listing.
4. Set your terms
It’s your car, so you drive the deal! You can control where, when, and who you meet. Decide whether to accept only ID-verified buyers, or buyers with verified funds. Don’t waste your time with buyers who aren’t verified according to your preferences.
5. Vet incoming offers
Manage offers in one place with the ability to accept, reject, or counter offers within the app. Listing on multiple sites? Filter all communications through PrivateAuto by sharing your listing link on all platforms. Your personal info is protected: no more giving out your phone number or email address. All communication happens in our app.
6. Choose a buyer
When you find an offer you like, accept it and proceed to the next step with that buyer.
7. Schedule a meeting
The buyer will want to look at your car. No more back-and-forth texts. You never have to give out your phone number. Rather, use our handy scheduling feature to schedule test drives and coordinate a time and place for meetings. (Oh, and you’ll be able to finalize the transaction instantly at the first meeting, FYI.)
8. E-sign documents
After the buyer is satisfied with your car and the two of you have agreed on a purchase price, you can easily e-sign the bill of sale within our app, from your phone. With our shared documents feature, you can easily locate the paperwork needed after the sale.
9. Get paid, instantly
Before PrivateAuto, receiving funds was the most stressful part of the entire selling process, especially for any used car sale over $5,000. There just aren’t a lot of good ways to move large amounts of money quickly and conveniently. Those days are over! Verify and receive funds instantaneously with PrivateAuto Pay, our innovative banking integration. Guaranteed funds for transactions large and small.
10. Transfer title
When you sell your vehicle, fill out the necessary information on the back of the Certificate of Title and sign in order to transfer ownership of the vehicle to the new owner.
North Carolina Used Car Sales Tax FAQ
How is NC vehicle tax calculated?
To calculate the North Carolina vehicle tax, multiply the purchase price of your car by the state tax rate, which is 3%. Luckily, cities and counties don’t levy additional taxes on your vehicle purchase.
For example, you’ve got your heart set on a used Jeep Wrangler that costs $23,600. You are a resident of North Carolina and want to register and title this baby within the state. Multiply $23,600 (the car price) by 0.03 (the sales tax in decimal form), and voila. The sales tax amount you need to pay for your new-to-you Jeep Wrangler is $708.
Remember to add registration, title, and license fees on top of this.
Can I register a car in N.C. with an out of state license?
You can register a car in North Carolina with an out-of-state license. If you’re a new resident of the state and still haven’t obtained the North Carolina ID or driver’s license, you can register and title your vehicle with a valid out-of-state license. You will also need a North Carolina Temporary Driving Certificate.
In addition to the driver’s license and the temporary certificate, non-residents must provide one of the following:
- A military ID (for active-duty military personnel stationed in North Carolina)
- A student ID (showing enrollment in a North Carolina college or university)
- A Form MVR-614 documenting that the vehicle is kept in North Carolina for at least six months each year
- A court-ordered sale of the vehicle
What is the most expensive state to buy a car?
California is the most expensive state to buy a car because the average cost of cars there is higher than in many other states. According to an iSeeCars.com analysis, the average one-to-five-year-old car cost around $33,600 in December 2022.
In California, the exact same vehicle with the same year, mileage, condition, make, and model can cost more than it does in states like Massachusetts, Ohio, or Delaware. Factors like supply and demand, local market conditions, and the high cost of living in California can all work against you.
Sales taxes can affect the total cost of car acquisition. California sales taxes are a whopping 7.25%, plus applicable city and county sales taxes, which only increases the amount of the total sales tax rate.
Sales taxes vary wildly from state to state. When you get a state with a higher cost of living combined with a high sales tax, you have a formula for more expensive car purchases.
The so-called NOMAD states—New Hampshire, Oregon, Montana, Alaska, and Delaware—charge no sales tax on motor vehicle purchases.
Why does it cost so much to register a car in North Carolina?
North Carolina car registration costs are actually on par with most other states. When you buy a new or used car, you have to pay $38.75–$86.25 to register your vehicle. Add title and license plate fees on top of that, and don’t forget the sales tax of 3%, which is pretty low compared to other states.
Vehicle registration in North Carolina has to be done and paid for annually, so you may feel like you’re getting ripped off. The proceeds from vehicle registration go mainly toward the repair and maintenance of the state’s roads. A portion goes to the North Carolina Highway Trust Fund and the state’s General Fund.
What is the ad valorem tax in NC?
In North Carolina, the ad valorem tax is a tax based on the value of property (it literally means “according to value”). This is the vehicle property tax that you pay at the same time as the vehicle’s registration renewal fee.
The amount of the property tax depends on how much the car is worth. You can use the NCDMV’s vehicle property tax estimator to estimate your vehicle’s value.
Unlike sales tax that has to be paid when you purchase a vehicle, ad valorem tax is paid annually, whenever you renew your car’s registration.
Do I have to retake my driving test if I move to North Carolina?
You do not have to retake your driving test when you move to North Carolina. If you become a resident, you must obtain a North Carolina driver's license within 60 days of establishing permanent residence.
To apply for a North Carolina driver’s license, bring the following documentation to a NCDMV office:
- Out-of-state license or one document with your full name and date of birth
- Social security card (or other document with your social security number)
- A document that verifies your physical address in North Carolina
- A document proving liability insurance coverage in North Carolina
How can I get personalized and specialized license plates in North Carolina?
Personalized and specialty plates can be obtained for vehicles that are currently titled and registered in North Carolina. You can do this by mail or online through the North Carolina Department of Motor Vehicles’ online service called PayIt.
To order a plate, you will need your current license plate number and the last five digits of the vehicle title number.
To personalize a standard license plate design, fill out the personalized license plate application form. For a specialized registration plate, you must fill out the appropriate special plate application.
What are instant titles?
Instant titles are usually processed and given out the same or next business day. Typically, to process title applications, the NCDMV usually takes 10–15 business days. If you’re in a hurry, instant titles will cost you $105.75.
Is it cheaper to buy a car in North Carolina or South Carolina?
It seems that used cars are cheaper in South Carolina than in North Carolina, according to Fox 8 Morning News. The average used car price in South Carolina in 2022 was $32,591. In North Carolina, the average price for a used vehicle was $33,774. However, both states were below the national average ($34,852) that year.
When it comes to sales taxes, North Carolina wins by a landslide, as the state sales tax in South Carolina is 6% on the purchase price. Unlike North Carolina, local municipalities and cities in the Palmetto State levy additional taxes.
How does DMV determine car value?
The DMV (Department of Motor Vehicles) uses sources like the Kelley Blue Book or the National Automobile Dealers Association to get an idea of the car's value. The DMV uses this information to figure out how much sales tax, registration fees, and other taxes may need to be paid when the vehicle is registered or when the owner changes.
What do I do if I don't agree with the NCMDV’s fair market car value?
After a vehicle owner has received their combined notice and disagrees with the value, they should contact the county tax office in which the vehicle resides. The owner has 30 days to appeal from the due date, which is the 15th day of the month following the registration renewal action or similarly on a new registration.
Do I still have to get my car inspected before I can renew my registration?
In North Carolina, your car must pass a safety and/or emissions inspection every year before you can renew your registration. As in years past, you can have your car inspected as early as 90 days before your registration renewal is due. If your car is at least 35 years old, you do not need to get it inspected.
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