The Ultimate Guide to Buying a Car Out of State
When you're in the market for a car, your best option could be buying a car out of state. You might find a better deal, or it might be the only way to find a specific model you're looking for. Or it might be the only way to find the exact features you want.
The process can be tricky if you don't know what you're doing, though. This guide will tell you everything you need to know to avoid problems.
Content List
Should You Buy a Vehicle Out of State?
How to Buy a Vehicle Out of State
Make Sure the Car Meets Your State's Requirements
Is It Worth Buying a Car Out of State?
Can I Buy a Vehicle Out of State?
Do I Have to Pay Taxes Twice If I Buy a Car Out of State?
Can You Drive a Car without Plates If You Just Bought It?
What State Is the Cheapest to Buy a Car?
Should You Buy a Vehicle Out of State?
There's nothing preventing you from buying a vehicle out of state. You do not need to consider if it's worth it, though. It can take more time and effort than if you were to buy locally. Plus, the costs can add up.
You might decide to travel to where the car is located. Test driving a vehicle before buying it is always a good idea. However, the trip will take time and can get expensive.
On the other hand, you could save a little time by hiring a shipping company to deliver the car. However, it won't necessarily be cheaper.
You'll also want an independent mechanic to inspect the car to ensure that it's in good working order. It can get complicated, especially if you don't know anymore who lives in the area.
If you simply can't find the right vehicle locally, then buying a car out of state is the best option.
How to Buy a Vehicle Out of State
Now, let's take a look at how you can buy a car out of state and what you should consider during the process.
Check the History of the Car
You've shopped around and found a few cars you're interested in. Before you do anything else, you must check the history of the car for any problems.
Your best option is to get a vehicle history report from a well-known company, like Carfax. If you find anything problematic on the report, you should talk about it with the owner before you do anything else.
If there are liens against the car, the owner has to settle them before you try taking the car out of state. You can use a Lien Payoff Service, where the Buyer and Seller guarantee that the current lien holder will be paid off at the close of the transaction.
You should also ensure that the name on the listing matches the name on the car's title. Also, check who owned the car before the current owner. This way you can make sure you don't end up with a stolen car or some other unpleasant surprise.
Inspect the Car Before Buying
No matter where in the country the car is, you want to test drive it and have it inspected by an independent mechanic.
The best option would be for you to see the car in person. In fact, you should never buy a car or truck unseen. You need to test drive the car yourself to make sure it's the right fit for you.
If you really can't travel though, you absolutely must get a mechanic to look it over. The last thing you want is to end up with a car that isn't running properly.
You can't rely on what the owner says. While most people tend to be honest, not everyone is, and you could end up with a defective car.
In some cases, the owner might not even know there are problems. So, you definitely should get a mechanic to inspect it, even if you've test driven it.
The cost of an inspection will save you a lot more in the long run. It will protect you from purchasing an unsafe and unreliable car that would require a major investment to become drivable.
This also applies if you are purchasing the car from a dealer. No matter what the dealer promises or guarantees, getting your own mechanic to check the vehicle is your safest option.
Make Sure the Car Meets Your State's Requirements
Even though you're buying a car out of state, you still have to make sure that it aligns with your state's requirements. Otherwise, you won't be able to register and drive the car.
The DMV website in your state will provide you with all the information you need to ensure that the vehicle conforms.
One factor to pay special attention to is emission standards. These established the maximum amount of air pollutants a car can release into the atmosphere.
While most new vehicles will conform to the strictest air quality standards, older vehicles or vintage cars might not conform. California's emission standards are frequently used as a benchmark because they are the most rigorous.
You can often pay to bring the car up to standard, but it will be very expensive. More often than not, you're better off just buying a different car.
Fourteen states and Washington D.C. have adopted the same standards as California. So, a car registered in any of these areas will conform to California's emissions standards. The states are:
- Arizona
- Connecticut
- Maine
- Maryland
- Massachusetts
- New Jersey
- New Mexico
- New York
- Oregon
- Pennsylvania
- Rhode Island
- Washington
- Vermont
Sorting Out Payment
Your best option is to use an escrow service as it will ensure both parties are safe. An escrow service will hold the money and only release it to the seller once the purchase process is complete.
Using a licensed escrow service like the one provided by Escrow.com will ensure both you and the seller are protected. It's also a great way to convince a seller to hold the car for you.
Placing the money in escrow doesn't force you to go through with the purchase. It does show the owner that you are serious, though. This way, you can avoid traveling across the country only to find that the owner already sold the car.
If you can't visit the car and will never meet the seller, an escrow service will protect you against fraud and other unpleasant situations. Furthermore, the payment can be reversed if you decide against buying the car.
Dealing with the Paperwork
This is where things can get a little complicated. The paperwork related to the sale itself isn't all that difficult to sort out. The problems start when it comes to registration.
Buying from a dealership is slightly easier since they have people specialized in working with the DMV. Thus, they will be able to sort out all the paperwork you need to drive your vehicle home legally.
If you're purchasing from a private party, you will have to handle the DMV yourself. Don't worry, though. It's not that difficult as long as you know exactly what you need to do. Plus, getting the car of your dreams is worth the extra hassle.
Just remember that you'll need a signed title and bill of sale to prove you own the car. You might then have to apply for temporary registration so you can drive the car home. Or you can use Escrow.com's Title Collection Service, where the Buyer and Seller can guarantee that the title for the vehicle arrives safely to the Buyer after the purchase.
In either case, you will need to get a new title and registration in your state, even when you receive a signed title. Depending on the state, you may only have 30 days to get these from the moment you brought the vehicle in.
If you are bringing the car from out of state, your home state's DMV might want to inspect the car for safety reasons, even if it has already been inspected. They'll check the following:
- Seat belts
- Brakes
- Front end assembly (steering, suspensions, chassis, frame and wheel fasteners)
- Tires
- Lights
- Windshield and all other windows
- Windshiled, wipers, and blades
- Horn
- Mirrors
- Fuel Leaks
Transporting the Vehicle
You can either drive the car home or you can have it shipped. The option you decide on will depend on the time and cost.
If you have to travel a significant distance, then a shipping company might be the best option. When traveling yourself, you'll have to pay to get there, cover the cost of accommodation, pay for fuel, and so on. You might also have to pay for additional insurance and temporary registration.
Once you factor in all the costs, you might find it cheaper to use a shipping company.
If you're purchasing from a dealer, things will be easier. They often work with transport companies and will be able to get you a better deal than if you were trying to ship the car yourself.
Paying Taxes
Sales tax is the one area you won't save any money, even if you're buying a car out of state.
You have to pay tax in the state where you will be registering the vehicle. If you're buying from a dealer, they'll collect local sales tax. However, you'll still have to pay the difference in your own state if the sales tax is higher.
Even if you're buying from a state where they don't charge sales tax, the savings will only apply if you register the car in that state. The states where the sales tax is zero are:
- Alaska
- Delaware
- New Hampshire
- Oregon
Most states require you to have your car registered in the state where you live. So, you'll still end up paying sales tax at home on the vehicle.
If the only reason you were considering buying a car out of state was to save money on sales tax, then you're better off buying from your own state.
If you do end up buying out of state, make sure that you keep records of all the payments you've made and when. You'll likely have to provide proof at the DMV, and if you don't have the necessary paperwork, you could end up paying the sales tax twice.
Don't Forget About Insurance
In most states, you need to be self-insured or have a car insurance before you can legally drive the vehicle.
Getting insurance can be pretty complicated. It's a good idea to talk to an insurance agent you trust well in advance of buying a car out of state.
With a little luck, your existing insurance will provide coverage for a new vehicle you've bought for a short time. Sometimes, however, this won't be the case.
If you currently don't own a car, you need to get insurance so that you are covered when you drive the vehicle away.
Is It Worth Buying a Car Out of State?
While the process of buying a car out of state can get complicated, it's very doable. You just have to take the time to do your due diligence. After all, when you know what you need to do, everything becomes much easier.
Regardless of why you want to buy a car out of state, the advice in this guide will simplify the process. So, when you search for cars, you can confidently expand your search radius beyond your state's borders.
Just remember that it isn't always much cheaper to bring a car in from another states. If saving money is the only reason you're looking out of state, you need to do your calculations. In some situations, it will be cheaper. In others, though, it might not, especially once you factor in travel and/or shipping costs.
Frequently Asked Questions
Can I Buy a Vehicle Out of State?
You can definitely buy a vehicle out of state. You just have to make sure it's worth it as it can get expensive.
Do I Have to Pay Taxes Twice If I Buy a Car Out of State?
Yes and no. If the state you are purchasing the vehicle in has no sales tax, you will have to pay the sales tax in your home state. So, you'll actually be paying taxes once.
If the state has a lower sales tax, then you will have to pay the sales tax there, plus the difference in your home state. You won't be paying double, though. So you could still say that you are paying taxes once, even if you are making two payments.
Can You Drive a Car without Plates If You Just Bought It?
It depends on the state. In some states, you can drive without plates for a few days, or you can use the owner's plates. In others, you will need a temporary registration.
What State Is the Cheapest to Buy a Car?
The cheapest state to buy a used car based on the initial cost is Florida, with vehicles costing as much as 10 percent less than the national average.
In terms of DMV fees, the best state to register a car is Oregon as you'll only have to pay $130 at most.
How Do I Transfer Ownership of a Vehicle?
To complete the sale and purchase of a vehicle, you will first need a Vehicle Bill of Sale. This document outlines the terms and conditions of the sale between the two parties. It includes information such as the:
- Purchase price
- VIN
- Model and year of the car
- Warranty
- Odometer provisions
- Signed legal names and addresses of the buyer and seller
- A notarized signature, if applicable.
Once the Bill of Sale has been signed, you have to pay for the car. Also, the seller must release any liens against the vehicle.
The seller then has to fill out and sign the transfer section on the certification of title, and hand you the title.
The next step is to submit the paperwork to your local DMV. You can mail it in, but it is faster to go in person. You will need:
- The certificate of title with the seller's signature as well as your own
- A form to arrange payment of taxes
- An application for vehicle transactions
- Proof of payment of the necessary taxes and DMV fees
In some states, you will also have to supply a smog certification and a Seller's Report of Sale. The latter states that the seller has no legal interest in the car.
Summary
Buying a car out of state might seem daunting at first, but it's acutally easier than you might imagine. It's simply a matter of following some simple rules and getting the paperwork right. This guide goes in-depth, covering a variety of possible situations, to help you buy your dream vehicle, even if it is in another state. Just follow the advice, and you'll have your car home before you know it.