Buying a Car Out of State: A How-To Guide
Crossing state lines to buy a new car can open up some great options, like finding the car you want at a lower price or locating a hard-to-find model. It’s also perfectly legal to do, but the process can be a bit of a challenge to navigate. Before you decide to purchase a vehicle out of state, be sure you know what you are getting into.
Things to consider are emissions tests, fees, license(s) and/or registration, among other requirements. Arranging a purchase remotely can also make you vulnerable to scams or other common buyer oversights like failing to get a vehicle inspection or run a vehicle history report.
One thing to know before you commit to buying a car out of state is that the transaction requires a lot of preparation. Be sure to follow these steps to ensure your purchase is done the right way and it’s worth your time and effort.
- Why buy a car in another state?
- Before you go: Do your homework
- How to buy a car out of state
- The bottom line
Why buy a car in another state?
Widening your search for a car to locations outside your state can mean finding a better deal. It can mean finding the right color combination or locating a hard-to-find vehicle that may be sold out in your state. It can also mean accessing a wider array of discounts or rebates, and perhaps finding savings that aren’t currently available in your state.
Why drive by just one lot or look at classified ads in the local paper when you could easily check out dozens of dealer websites and compare hundreds of listings online? Crossing state borders is just another way to widen your search for the best deal.
One of the main reasons buyers consider going out of state is in the hope of saving big money on sales tax. Be warned, however, while it may seem like you are saving big on sales tax, this can be a false savings. You may also find that a rebate or other incentive doesn’t help you reduce your overall tax bill, since you can still be taxed on the full price before the discount when you go to register your vehicle in your home state. We explore this more below.
Before you go: Do your homework
Crossing a state border for your next car might seem like a great idea, but you’re bound to regret it if you don’t do some research first. The time, money and trouble of sourcing and purchasing a car over state lines can make it a daunting task. Here’s what you need to do before you buy a car out of state:
See the vehicle in person and test drive it
Even if you find a seller through a reputable website, you should still take reasonable precautions. Seeing photos of the vehicle isn’t enough to ensure you are getting a good vehicle. Fraudsters can easily provide photos of cars they don’t actually own. This is known as online sale fraud and the FBI warns consumers about it. Make sure to meet the seller in-person, at a safe, public location, so you can see the car and take it for a thorough test drive.
A test drive is important because it can help you decide if the car is comfortable to drive in, and it gives you a chance to see how the car performs in various road conditions, like going over hills and driving on the highway. It can also help you identify any potential mechanical issues.
Obtain a vehicle history report
Don’t rely on the seller to tell you everything about their vehicle. Once you’ve picked out a car, you can pull several different reports to give you insight into its history before you commit to purchasing it. Several useful reports require you to have the vehicle’s VIN, or Vehicle Identification Number. This can be found on the dash and is visible through a car’s windshield. You can also ask the seller to provide this number so you can pull a VIN report.
Here are some recommended reports to run:
NMVTIS Title Information. Available in most states for a minimal fee through the National Motor Vehicle Title Information System. This report can help you confirm the accuracy of important information on the car’s title, like the odometer reading, theft history and salvage or flood damage records.
NICB VINCheck. Free service through the National Insurance Crime Bureau that shows VIN information, including whether the car has been reported stolen or if it’s a salvage vehicle.
Safety Recall Lookup. Free search through safercar.gov that allows you to use the VIN number to determine if there’s an outstanding recall on the car, meaning it’s in need of repairs. Most manufacturers will do the recall repairs free of charge.
In addition to these free services, you can also use pay services like CarFax, AutoDNA, or AutoCheck to find out more about the particular vehicle you are interested in purchasing. It’s important to know that a VINCheck and reports won’t necessarily protect you from purchasing a lemon vehicle. In some cases, a VINCheck can be inaccurate so it pays to pull more than one and compare them.
Watch for scams
Arranging to buy a car remotely can make you more susceptible to common car-selling scams. You may be tempted to jump on a good deal without first seeing the car in person, especially if you can’t get to the car right away, but you should never let a seller rush you to make a purchase, especially if they ask you to send the money up-front. Here are some scams to watch out for:
Vehicle sale fraud is when a seller posts an ad for a car that they don’t actually own or have in their possession.
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.
Vehicle cloning is done by stealing a car, removing the VIN, and then replacing it with a counterfeited VIN that’s been copied from another legally-owned car with the identical make, model and year.
Schedule an inspection
If you’re headed somewhere 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. You can also read our story on finding a mechanic you can trust, here.
If you’re buying a new car from a dealership you can forego the independent inspection since new vehicles on a car lot have been inspected. It’s still a good idea to give the car a visual inspection and make sure there’s no apparent damage.
Research registration requirements
Once you’ve located a car you want, taken it for a test drive and met the seller, pulled a VINCheck and had the car inspected, and decided that you want to purchase it, you’ll need to find out what is required in order to register it in your state. You’ll need to make sure it can pass smog and emissions requirements in your home state, ensure that you pay the proper sales tax for the state you’re registering the car in, and ensure that you have proper insurance coverage (more on completing these requirements below).
Some states have much tighter emissions restrictions than others, which means you could buy a car that can’t be registered in your home state.
The following U.S. states have the strictest emissions standards:
- New Jersey
- New Mexico
- New York
- Rhode Island
- Washington, D.C.
One way to find out if the car can pass requirements is by having the seller send you a photo of the emissions plaque, which can be found under the hood or in the engine compartment. The information on the plaque can help you determine if the car meets the California Air Resources Board (CARB) emissions standard, meaning it will pass emissions tests in all 50 states.
A passing car should bear a plaque that says something like “50-State Vehicle,” “California-Only Vehicle,” or “Federal Vehicle Certified for Sale in California.” Your state’s DMV may declare some vehicles exempt from these emissions requirements. For example, if the vehicle has over 7,500 miles on the odometer or if you received it as an inheritance, your vehicle can be exempt in the state of New York.
Understand the paperwork you need to finalize the sale
It’s crucial that you follow documentation procedures in both your state and the state where you make your purchase. Contact the DMV in both states to make sure you know what paperwork and processes you’ll need to complete to legalize the purchase. You’ll likely need to get the following documents from the seller to present them to the DMV after your purchase:
- Bill of sale
- Out of state title certificate
- Transferable registration
Each state has different requirements. Below you’ll find a list of registration requirements by state. Be sure to read the requirements for both the state you are purchasing the car in (so that you can ensure that the sale is legal in that state) and the state you will be registering the car in (so you can drive it in your home state).
U.S. registration requirements by state
Before you go through the trouble of traveling out of state, make sure you have the financing you need. First, figure out what your budget is by using an auto loan calculator. Once you know your budget, apply for preapproval so you can comparison shop.. You can potentially get better terms when you arrange financing with your bank or credit union instead of a dealership, and you can avoid the extra time spent working out financing while you’re at the car lot or while haggling with a seller.
Whether you’re buying a new or used car, there are a few things that lenders look at before extending you a loan approval. The requirements can vary, but generally they include a review of your credit records, your income and occupation and your debt and assets. Find out more about getting a good auto loan, here. Don’t worry if you have bad credit, either, you can still get an auto loan.
The lender will also want information about the car you’re purchasing. Some lenders won’t finance older vehicles or cars with a high number of miles, so you may want to check these restrictions to ensure the lender’s financing will apply to the kind of car you’re shopping for.
Determine the sales tax
It’s a common misconception that you can save money, or avoid sales tax altogether, by going out of state for your vehicle purchase. While some states offer lower or even no sales tax at all, you’ll have to pay taxes in the state where you register the car. This usually has to be done where you have proof of residence. You may also be subject to local city taxes and county taxes.
Overlooking this detail means you could end up owing much more than expected. Before you go shopping, make sure you understand how much you’ll need to pay for sales tax in your state.
How to buy a car out of state
Once you’ve found your next car, take the following steps to get your car home safely and make it officially yours.
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 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. In order 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.
Pay taxes and get temporary registration
The process of paying sales tax can vary depending on who you buy your car from. If you buy from a dealer, they may or may not collect sales tax and submit on your behalf and offer a temporary registration so you can get the car home. Be sure to ask about this beforehand. If the dealer does submit payment for you, be sure to keep records so you’re not charged again in your home state.
Dealerships will generally give you temporary registration to cover you while you transport the car home and complete the process of getting registered there, but if you buy from a private seller you may need to get a “drive away” or “one-trip” permit directly from the DMV in the state where you purchase the car. Make sure you understand how long your temporary registration lasts, since your state will have unique requirements.
If you buy from a private seller, you’ll likely need to pay taxes to the DMV when you register the car in your home state, and you’ll need to deal with a temporary registration yourself so that you can get the car home.
Each state has its own timeline and requirements, so make sure you understand and comply with the temporary registration requirements in the state you buy the car in.
Consider shipping your car home
Driving your new car across state lines isn’t the only way to get it home. Shipping your car can alleviate some of the burden of arranging transportation to pick up your new vehicle.
If you decide to ship your vehicle, know that it can take several weeks for it to arrive, and you may have to pay somewhere around 50% to 60% more for enclosed carriers, plus additional fees for other conveniences like set pickup dates and locations.
You may be able to speed up the process and even save yourself some money by comparing shipping companies and rates beforehand, and booking the service in advance. Another step to take before shipping is to contact your insurance company and make sure they’ll cover any potential damage incurred during the trip.
Register the car
Once you get the car back home, you’ll need to register it. Be sure you know what the requirements are for your state, including a set timeline for you to complete your formal registration. You may be required to pass inspection or complete other processes in the meantime. See links above to review your state’s requirements.
Transferring ownership will require both you and the seller to report information to your respective DMVs, which includes each party submitting paperwork to the local DMV.
Dealers will take care of the requirements in your state of purchase, but you’ll need to take additional steps in your home state. Requirements vary but you’ll likely need to present the signed pink slip with the vehicle’s current mileage, a smog or inspection certificate, proof of insurance and additional tax forms as required by your DMV. Check with your local DMV to find out what specifically you may need to complete the transaction.
The bottom line
Buying a car out-of-state can be a major undertaking. If you buy from a dealership, the dealer may alleviate some of the burden by filing paperwork or submitting tax forms once you have paid for the car. You’ll still have to complete the process through your state DMV, though. A private seller is likely to be unable to assist with paperwork or help you comply with regulations so you’ll need to take on those responsibilities yourself.
The extra work doesn’t mean buying out of state is a bad idea. If you do your research and make sure to understand local and state taxes, shipping costs and other related fees, you can determine if the car you want is worth the effort. As with any big financial decision, doing the math up-front can save you from making a very expensive mistake.