If you buy a car from a private party, you might have to pay more for it than you expect.

It's all because of the way the state calculates the tax on the car.

When Cliff Parshall of Kent bought a 1989 BMW for $1,400 from a private party, he thought he was getting a sweet deal.

But when he went to transfer the title…

"They felt the price was too low," he said.

Parshall said the agent at the local Department of Licensing office declined to process the title.

"The price that I paid for the car only fit at the lowest as a parts car," Parshall said.

But the car wasn't a parts car, so Parshall went back and asked the seller to give him a list of everything that was wrong with the car.

"But they wouldn't accept the list from the seller because they said it wasn't an appropriate form. I had to use an affidavit," he said.

"The state law for use tax requires us to collect it on the actual value," said Brad Benfield, a spokesman for the Department of Licensing.

When you buy a car, you don't pay sales tax, you pay a use tax, and it's not the same.

"A lot of people they don't really understand. They want it to operate more like sales tax, where they bring in their bill of sale and they want to pay on what they paid or what they said they paid," Benfield said.

The state changed the way it collected the use tax about seven years ago after an audit determined the state was losing money.

Car buyers were ripping off the state, not being honest about how much they paid for the car, so they could save a few bucks on tax.

"We designed a system that would allow us to essentially automatically look at values as we entered a transaction into our computer system," Benfield said.

An agent at the vehicle licensing office checks out the paperwork, then keys the sales amount into the computer -- and that information is then compared against fair market value for the vehicle.

The state now gets its fair market value information from what's known as the red book.

Remember what Parshall paid for that 1989 BMW? Fourteen hundred dollars.

Well in the red book, Parshall's car is listed at $3,175 dollars for the lowest value and $4,775 at the highest value.

But compare that will the Kelly Blue Book Value, which puts top value -- meaning the car is in excellent condition -- at $2,850.

"By looking up Kelly Blue Book, I found the prices were much, much more reasonable, much more in tune with car sales in general," Parshall said.

"There's a lot of different ways that people can come in and make sure they're not paying more tax than what is due," said Benfield.

In the end Paschall, did get his title.

According to the state Department of Licensing, if your car purchase price is within $2,000, then the transaction should go through with no problem.

But if there's more than a $2,000 difference, that's when the DOL will consult their Red Book prices.