In this connected and digital age, it has become quite normal to look further afield for the best-possible deal on a car. With access to private seller classified ads all over the country, a growing number of sales are crossing state lines. It makes sense if you think about it, especially if you’re within 1 state border or 2 from a larger and more populous state like California, Texas, or New York. There’s a lot more choice to be had when you widen the net to interstate level.
The main problem people have is with the many potential pitfalls that surround buying a car out of state and registering it in your home state. There are various rules and regulations that you need to be aware of. Naturally, there will be differences between every state, but in today’s blog we’ll try to create a bigger picture of interstate car sales and what’s required for the buyer to do.
Background: Why Do People Bother Buying a Car Out of State?
Some of the reasons people opt for buying a car out of state we touched upon in the introduction. The biggest thing people get is more choice, and that includes a choice of price ranges. More choice is good when you want to find something really perfect. Limiting yourself to the local area inevitably means you’ll have to settle for something less and compromise over features, quality, etc.
Another good reason to buy out of state is the local environment. For example, buying a car from a warm part of the country like Southern California means you’re buying a car that hasn’t received any additional harsh wear and tear from long and drawn-out winters. Different local climates and environments give advantages.
Finally, people often look out of state because their local market simply doesn’t contain the type of vehicle that they’re looking for. You’re much more likely to find a champion-quality off-road vehicle somewhere like Colorado, for example, where the mountains and landscape invite off-roading and there will be a lot of vehicles on offer.
5 Steps to Buying a Car Out of State
In this section, we’ll look at the steps required to purchase, ship and register a car from out of state. As we said earlier, there could be differing regulations in each individual state, but the following steps are very representative of the requirements in most places. For additional information, you should consult your state DMV website or inquire at one of their local DMV customer service centers.
Step 1: Determine a Sales Channel
The first thing you need to do is determine and confirm through what channel you want to buy a car: from a dealership or from a private seller. The dealership is the easier of the two options since they will help you with many of the administrative steps required in getting the car registered, and will typically provide after-sales services.
Consider the main advantages of each. The dealership is more convenient but will leave less room for negotiation. The private seller means more paperwork being done by you, but there’s more room to negotiate as the private seller isn’t trying to just meet a monthly sales quota.
Step 2: Test a Model Locally if Possible
If your local area has a similar model or the same model as the one you’re buying out of state, then you should try to test drive the local one if at all possible. If that means feigning interest at a dealership so you can test the car that you’re getting for a better deal out of state, then so be it. It would be an expensive mistake to buy a car from out of state, only to later discover that you don’t like driving it.
Equally, traveling to the seller’s location just to test the car is also risky since the expense of going there just to find a car you don’t like makes the experience of buying out of state more wasteful.
Step 3: Inspection
Inspection is the best way to avoid issues with quality (see below for more), so it’s important to hire an independent car inspector who can go to the seller or dealership and look over the car properly before the sale is completed.
The need for this might be diminished at big-brand dealerships where they may have a certified pre-owned program with rigorous inspections and guarantees. However, if you’re buying from a smaller, independent dealership or a private seller, such an inspection is important. Take any objection to your independent inspection as a deal-breaking red flag.
Step 4: Travel or Ship?
The next step would be to consider whether to travel to the out-of-state location and pick up the car yourself from there, or have it shipped to you in your home state. The former is the more exciting of the 2, and could work out to be the cheapest.
You can expect to pay about $499 for shipping as a typical or average, but quite possibly more depending on distance and level of service. Alternatively, you could buy a plane ticket for $200 or so, go to the seller’s location and simply drive the car back. Even great distances like New York to Denver can be as little as $100-200 depending on when you book.
Step 5: Insurance and Registration
The final step, and arguably the most important in terms of avoiding potential trouble, is getting the insurance and registration done. If you’re buying the car from a reputable dealership, then they should be able to get you a temporary registration that allows you to drive the car home, after which you can get a full registration in your home state. The typical rule is that you’ll have to register your car in your home state within 30 days or so.
If you’re buying from a private seller, you’ll need to get temporary registration yourself. You’ll need to go to the DMV of the state in which you are buying the vehicle and apply for a temporary registration, which is sometimes known as an “in-transit vehicle permit.” That DMV will give you the temporary registration and plates as long as you have the bill of sale and the title of the vehicle signed and transferred to you by the seller. In most cases, that can be done and then taken to the DMV, but in some states — e.g., Pennsylvania — you have to do it in person and be witnessed signing the forms by a DMV employee, so be clear on the rules.
As for insurance, you’ll need to confirm that before the dealership can even help you with the registration. Confirmed insurance is an important factor of legally registering the vehicle. Once you’ve brought the vehicle back to your home state, you’ll typically have a window of 30 days to register the vehicle in your home state, for which you’ll get new plates and a new registration document.
Buying a Car Out of State: Potential Pitfalls and Things to Remember
So, the basic steps needed to buy and register the car out of state are actually fairly straight-forward, but there are a number of key areas where you still have to be careful:
1. Sales Tax
The first and most important of these pitfalls is sales tax. Some people think they can outsmart the system by going to states like Delaware and New Hampshire where there is no sales tax, buying a car there and taking it home where they can enjoy a tax-free car. If that were possible, then the vast majority of car sales transactions would be conducted in those 2 states and others with no sales tax.
The reality is that regardless of where you purchase the vehicle, you will pay sales tax according to where you register that vehicle. Therefore, if you buy in New Jersey but register in Florida, you’ll pay Florida sales tax, which incidentally is 6 percent. If you live in Tennessee, Louisiana, Arkansas, Washington or Alabama, then beware because your local and state sales tax averages to more than 9 percent. Tennessee gets as high as 9.55 percent.
2. Emissions Standards
You’ll have to be careful that your new car will be able to meet your local emissions standards, because these vary from state to state. Residents of California looking for a great out-of-state deal are most at risk of falling into this pitfall because their new standards are the strictest in the entire country. Every state DMV now warns buyers about this potential issue.
3. Registration Issues
The rules on registration will differ from state to state, and so it’s absolutely essential that you become well versed in your local requirements before bringing in an out-of-state vehicle. The one thing that’s essentially the same is that the local DMV where the car is being sold can issue a temporary registration allowing you the chance to drive the car back to your home state. As for requirements in your home state, these will differ, be ready for:
- Additional charges
- Additional inspection requirements
- Extended waiting times
- Strict time limits on starting the registration process
4. Quality Issues
Because you can’t be physically present to view the car up close and inspect quality, there are some rules you should impose on yourself when looking at out-of-state cars:
- Ignore any and all listings that are lacking in close-up high-resolution photographs.
- Ignore listings where the seller appears to be concealing a part of the car or who doesn’t share full information on the car.
- Ignore listings where there is no service history, or significant periods of missing service history.
- Ignore listings where the seller refuses to allow your local independent inspection.
- Request a video walk-around of the car where they show you every side and angle of the interior and exterior. Most dealerships will do this automatically now.
Buying a Car Out of State: Is It Worth It?
In the end, then, is it really worth buying a car out of state? With the added steps and potential added costs, why not just stick with what’s in your home state? The main benefit of buying out of state is taking advantage of lower prices in some areas of the country, even when you factor in other costs. Another big benefit is choice, with a whole nation of vehicles opening up. If you’re looking for a very particular kind of car, such as a classic or limited edition car, it could be the case that finding one out of state is your only option.
In the end, how worthwhile the exercise is of buying a car out of state will be down to the individual buyer’s subjective viewpoint. If it’s worthwhile to them, then they should pursue it. It’s hard to apply any objective judgment on that.