What a financed car actually costs out the door in Kentucky — the sales tax this state really charges, whether it credits your trade-in, and what the payment does to what you can borrow for a house.
Trading a car in here reduces the amount sales tax is charged on, so you are taxed on the price less your trade-in allowance. That is the common rule, but it is not universal — a handful of states tax the full sticker price regardless, and the calculator below applies whichever rule is actually Kentucky’s.
Kentucky does not levy an ordinary sales tax on vehicles; it levies a 6% Motor Vehicle Usage Tax under KRS 138.450-138.470, paid to the county clerk at titling. There is no local add-on — 6% is the single statewide rate. Dealers are not required by statute to collect it; a buyer may pay the clerk directly. The base is 'retail price', which for a new vehicle is attested by notarised affidavit or, absent one, 90% of MSRP including standard and optional equipment and transportation charges, with manufacturer rebates NOT deductible from MSRP. LEASES are not taxed upfront: under the U-Drive-It provisions of KRS 138.463 a permit holder remits 6% monthly on gross lease charges, so a lease of 365 days or more is taxed payment-by-payment.
Money factor, residual, and the payment — taxed by your state's actual method, since some states tax a lease's full value upfront instead of each payment.
Which dealer offer actually costs less over the life of the loan, and the rate at which they tie.
Income, savings, and debts in — max home price and qualification signal out.
A dealer offers 0% financing or $3,000 cash back. On a $38,000 car over 60 months the two cost exactly the same at 3.70% — and above that, the 0% wins by thousands.
Co-signing a $683-a-month car loan cuts the house payment you can qualify for by $683 — dollar for dollar. And if it defaults, you owe the whole balance, not half.
One number, in writing, itemised — and the scripts that get it. Every line a dealer can add, which of them are negotiable, and what your own state's tax rules do to the total.
One number, itemised, with the taxable amount working your state's trade-in rule live rather than leaving it to you to remember: four states with a sales tax credit nothing against a trade-in, and Ohio credits it against a new vehicle only. Checks a documentation fee against the nine statutory caps this site has confirmed, and is explicit that the other 41 states are unresearched rather than uncapped. Prices the F&I office as the optional extra it is, and adds the trade-in payoff back into the amount financed — because negative equity does not disappear when you trade the car, it moves into the new loan and accrues interest.