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Buying a Car Out of State: A How-To Guide
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Buying a car out of state can open up some great options, like finding the car you want at a lower price or locating a hard-to-find model. However, the process can be a bit of a challenge to navigate. Follow these steps to ensure your purchase is done the right way and worth your time and effort.
- Get a vehicle history report
- Arrange a pre-purchase inspection
- Purchase insurance
- Avoid scams
- Buy the car
- Enjoy your vehicle
1. Get a vehicle history report
For used cars, the importance of reading a vehicle’s history report (VHR) or vehicle identification number (VIN) check cannot be overstated. A VHR could raise red flags for you to bring to the attention of the seller, prevent you from buying a lemon car or provide you peace of mind. Here are some recommended reports to run:
- CarFax. Services like CarFax, AutoDNA and AutoCheck typically provide the most in-depth information. They reveal accident data, service history, ownership history and title status. Many dealerships will provide a VHR from one of these sources for free to potential buyers, though you could also purchase one on your own.
- National Motor Vehicle Title Information System. Available in most states for a minimal fee, this report can help you confirm the accuracy of important information on the car’s title, like its odometer reading, theft history and salvage or flood damage records.
- Safety Recall Lookup. Free search that allows you to use the VIN to determine if there’s an outstanding recall on the car, meaning it’s in need of repairs. Manufacturers will do the recall repairs free of charge.
2. Arrange a pre-purchase inspection
If you’re headed someplace where you don’t know any mechanics, you may be tempted to skip this step. Even if you pull a vehicle history report and do a visual inspection, you can still miss out on crucial information about a used vehicle’s condition without having a mechanic inspect the vehicle.
Before you go out of state to see a used car, ask the seller if you can have an independent inspection performed; If the seller says “no,” you should consider finding a different car. When you find an agreeable seller, you can schedule your appointment with an independent inspection service or find a reputable auto shop by searching online and reading customer reviews.
If you’re buying a new car from a dealership, you can forgo the independent inspection since new vehicles on a car lot have been inspected. However, it’s still a good idea to give the car a visual inspection and make sure there’s no apparent damage.
Beware of California’s strict standards
If you live in California, beware that the state has some of the strictest emission standards. Vehicles that fail state emissions tests — also called smog tests — cannot be registered or re-registered until they do pass. There is a California Commuter Assistance Program that provides financial assistance for emissions-required repairs.
3. Purchase insurance
The cost of insurance depends on a few factors: These include the type of car, the registration address and how much coverage you select. You could estimate costs by using a coverage calculator, such as this one from GEICO, or ask for some quotes.
Each state has its own requirements for the type and amount of auto insurance coverage you need to carry. Regardless of where you buy your vehicle, however, your coverage cost will be based on where you live, not where you buy your car.
You might be tempted to wait on arranging coverage until after your purchase, but you’ll need to be insured for the drive home. To have your coverage ready, contact your insurance company before you purchase the car and ask how to make the transition seamlessly. You’ll also want to make sure you get proper proof of insurance in case it’s required when you register your car.
4. Avoid scams
All the steps we’ve covered so far help you to avoid any scams and pitfalls as you go through the process of buying a car out of state. Especially if you are buying from a private seller, it’s a buyer-beware situation. Here are some specific scams and how to avoid them.
Wire transfers are commonly used by scammers, who request rewire transfers because they are irreversible and immediate. The Federal Trade Commission estimates that U.S. consumers lost $311 million in wire fraud in 2020. We recommend that you never wire money and instead complete the transaction in the lobby of a financial institution, such as a bank, and exchange funds only after you’ve inspected the car and signed the title.
Vehicle sale fraud is when a seller posts an ad for a car that they don’t actually own or have in their possession. Don’t pay for a vehicle until you see it in person and sign the title.
Title washing, or title fraud, happens when a seller processes a car title through multiple states or physically damages the title documents so the buyer won’t find information about past damage that would reduce the resale value or make the car unsafe to drive. Getting a vehicle history report and an inspection can prevent you from unknowingly buying a damaged vehicle.
Vehicle cloning is done by stealing a car and replacing the VIN with a counterfeited VIN, which has been copied from another legally-owned car with the identical make, model and year. Searching in the NMVTIS database for the vehicle registration can reveal whether the seller is the same person registered with that VIN. If not, the car may be stolen or cloned.
5. Buy the car
Major purchases usually involve loans, taxes and paperwork.
Getting a car loan. If you need a loan and you’re going to a dealership, get preapproved. If you need a loan and you’re buying from a private seller (not a dealership), here’s how to get a private party auto loan. Lenders are in the business of making money off loans, so be sure to shop around for the one with the lowest APR.
Paying taxes and doing paperwork. One benefit that you will not get from buying a car out of state is cheaper taxes. The sales, registration and vehicle taxes you pay are based on the state in which you live. Dealerships will calculate the taxes and provide all the paperwork you need to sign, but you’ll likely have to do and complete the required inspections in your state. Different states will require different mechanical safety and emissions inspections.
Purchasing from a private party means you’ll need to complete the paperwork and pay the taxes yourself. Check with your state’s department of motor vehicles (DMV) to find the registration requirements.
6. Enjoy your vehicle
Don’t forget that at the end of this, you’ll have a great vehicle. Crossing state borders is a way to widen your search for the best deal. Plus, you don’t always have to drive the car back home; you can have the car transported to save yourself some time and stress. The advantages of buying a car out of state could be worth the potential extra effort.