If you’re thinking about buying a car in another state, it’s important to understand what the process involves. In some ways, purchasing a car out of state is different than buying a car in your home state.
While you might be able to save money or find a specific vehicle that’s not available locally, you could face additional costs without careful planning.
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Reasons to Purchase a Car Out of State
There are a few reasons why you might decide to purchase a vehicle in another state. Maybe you found a vintage or rare model across the country, or you found a great deal from a seller in the next state over.
Different states may use different standards to price vehicles, which means that cars could be slightly cheaper in a neighboring state.
The cost also fluctuates due to supply and demand. If a certain make and model is extremely popular in your area, you might find a better deal by looking for the same car in another market.
Considerations When Buying an Out-of-State Vehicle
Buying a car in another state is perfectly legal, but it’s a slightly different process than purchasing a car in your home state.
For instance, you must pay sales tax to the state where you will register your vehicle, not the state where you purchased the vehicle. So, if you buy a car in a state that doesn’t have sales tax, you’re still required to pay sales tax if your home state requires it.
You might need to get a temporary registration card from the state where you purchased the car if you plan to drive it back to your home state. You should also make sure the car meets the emissions standards of your home state, not those of the state where you purchased the vehicle.
For example, if you live in California, a car purchased in Nevada may fail the emissions testing of your home state. Some cars have a label indicating that they are manufactured to meet the emissions testing standards of all 50 states, so you should ask the seller if your car qualifies.
If you buy a car in a neighboring state, it’s probably easy enough to drive it back home. But if you’re buying a car across the country, shipping the car back home may negate any potential savings. If you are working with a dealership, they may have contacts that can help you ship the car home at a more reasonable price.
Steps to Buying a Car Out of State
Before you purchase a car out of state, it’s important to understand the process and what’s required to legally to register and drive the vehicle in your home state.
Review the Vehicle History Report
If you’re thinking about buying a specific car out of state, get a copy of the vehicle history report before you travel to see it. This report contains information about accidents, recalls, maintenance, and title issues, like a rebuilt title. It will unveil red flags that will either keep you from buying the car or affect your negotiations.
For example, if the vehicle history report shows that the car title has liens, these should be satisfied before you try to transport the vehicle back to your home state. Otherwise, you may be legally responsible for those liens.
Get an Inspection
If the car you want to purchase is used, it’s a good idea to have the vehicle thoroughly inspected by a mechanic before you agree to buy it. Take the car to an independent auto body shop and ask the mechanic to perform a used car inspection.
During a used car inspection, the mechanic will check the car’s parts and major systems, like the engine, transmission, suspension, brakes, tires, and steering system. If the mechanic finds anything wrong, use that as leverage to negotiate a lower price with the seller, or take it as a sign to walk away from the deal.
Find Out What Safety and Emissions Tests are Required
Contact your state’s DMV or look on the DMV website to see what required inspections your car will need.
Depending on state laws, this may include odometer, emissions, and/or safety testing. If your car fails the inspection, you will need to make the necessary repairs before you can complete the process of registering your vehicle.
Register the Car in Your State
After your vehicle has passed the inspected, you can visit the DMV with the inspection certification, your bill of sale, driver’s license, and proof of address. You may also need to provide a vehicle identification number (VIN) verification form. These documents will allow you to register the vehicle in your name and at your home address.
Make sure you find out the time limit for registering the car in a new state. In many cases, you must complete this step within 30 days of purchase to avoid fines. However, if you purchased the vehicle from an out of state dealership, they might help you complete the required registration paperwork.
Pay the State Sales Tax
As part of the car registration process, you must pay sales tax on your vehicle. The sales tax percentage for vehicles is the same sales tax percentage your state charges for other goods. If you live in a state that does not have sales tax, you won’t be charged anything, even if the state you bought the car in does have sales tax.
If you bought the car at a dealership, the dealer might collect your sales tax and provide a receipt. If you bought the car from a private seller, you would need to pay the sales tax at your local DMV when you register the vehicle. When you visit the DMV, either bring the receipt from the dealership or your bill of sale from the transaction.
Insure the Vehicle
To legally drive your new vehicle, you must have auto insurance, even before you get the vehicle back home. Some insurers cover new vehicles for a short period of time even before you add the car to your policy.
If your policy does not include this provision, or you don’t already have auto insurance, you’ll need to get coverage right away. In addition, if you are taking out a loan to purchase the car, the lender may have specific insurance requirements.
Before purchasing your new or used car, it’s a smart idea to get a car insurance quote from your existing insurance company. You might not realize how much insuring the vehicle will cost, which could change your decision to purchase it.
Finance & Insurance Editor
Elizabeth Rivelli is a freelance writer with more than three years of experience covering personal finance and insurance. She has extensive knowledge of various insurance lines, including car insurance and property insurance. Her byline has appeared in dozens of online finance publications, like The Balance, Investopedia, Reviews.com, Forbes, and Bankrate.
