It’s possible that during your automobile search, you’ve considered the feasibility of buying a car out of state. There are many reasons you might be eying dealerships across state lines. You could be looking for a specific model that isn’t as popular in your region. Or maybe you’re a collector, making a rare purchase from a private seller. Maybe you just found a really good deal (that happens to be in another state). If you’re looking to make any big purchase, it’s pretty sensible to want to save as much money as you can.
Depending on your location, buying a car out of state is fairly easy. It shouldn’t really be that much more difficult than buying locally. However, it does mean that some fees and responsibilities normally handled by a dealership will now fall to you. That can make the process a little more tedious (and expensive) than it would be if you were buying locally.
In short, buying a car out of state is extremely doable. However, here are some things to keep in mind.
Checking Out The Car
It’s true that buying a car out of state can be more tedious. However, a big chunk of the financial side can be figured out in advance. This will be a big-time saver when you actually make the purchase. The details can bite you financially if you aren’t paying close attention. But none of them are quite as difficult as figuring out exactly how you scope out this new car and confirm it’s the right one for you. Fraud can be a big problem in any industry where you are buying something sight unseen. If you cannot physically get to the dealership to test drive the car you’re interested in, you’re opening yourself up to some additional risks.
Hopefully, it’s feasible for you to to make at least one trip to see the car with your own eyes. If you’re opting to buy out of state because you’re hoping for some savings, then keep in mind you could end up still spending those savings in other places. A trip out of state will cost you extra money (gas, food, hotel) and a big chunk of your time. Both of those things will cut into your potential savings. In the end, you might not save nearly as much as you thought.
It will cost you even more if you buy a car without seeing it first, and it turns out to be a junker. If you absolutely cannot make it out to the dealership yourself, try to find someone else who can. You can hire a third party inspector (usually a mechanic) to go check the car out on your behalf. This will cost you a bit of money, so you’ll need to factor that into your final costs too. However, the peace of mind it provides might be worth it.
Financing a Car Out of State
If you are paying out of pocket for your new ride, first of all, congratulations. Second of all, don’t worry about this next part at all. If you’re like most of us, though, who have to finance their vehicles, keep reading.
Even when buying out of state, how and where to finance the car is your choice. You may be better off going with a local bank or auto lender. However, using the out of state dealer for financing is also an option. It’s a little more awkward across state lines, but it’s totally doable. There’s no rules saying you have finance the car in the state where you purchase it. Or the state you live in. The choice is up to you.
Taxes For Buying a Car Out of State
If you remember nothing else from this article, remember this one key point. You pay sales tax in the state you live in, not the state where you purchase the car.
Normally, a local dealership would help you calculate and handle all related taxes. If your state and the state you purchase the car in are reciprocal, then the dealership you purchase it from can still handle that. If the two states are non-reciprocal, then you will need to pay taxes yourself when you register the car. Don’t forget this important fact! Your potential great deal could vanish quickly once you realize you have a new tax bill in your home state as a result. In fact, the final price could end up being comparable to what it would have been if you’d just shopped locally.
The key advice to keep in mind when it comes to buying a car out of state and taxes is to not let yourself be surprised. Do your research in advance. Ask questions at the dealership about who will handle the tax obligations. And ultimately, make sure you are paying the sales tax as it applies in your home state.
You will need to register your car at your local DMV. This process typically involves an inspection. However, the exact laws can vary by state. So it’s essential to do your own research ahead of time. After your new car is inspected, you’ll usually need to bring inspection certification, ID, proof that you live in the state where you are registering the vehicle, and proof of ownership. That should be enough to get your new car properly registered.
You do this when you register the car. Title transfers are another thing normally handled by a dealership. However, if you bought out of state then you’ll need to deal with it yourself once you get your car home. Don’t skip this step, or you may find yourself in a sticky situation down the road the where ownership of the car falls into question.
The most important thing to do first is to check the language in your policy. This will help you determine when, exactly, your new car is covered. That includes whether it’s covered for the drive home or not. (Spoiler alert: it needs to be covered for the ride home).
In most cases, you should be able to add your new car to your old policy without much hassle. Unless your new car is significantly more expensive than your old one, you can also generally keep your previous plan. However, if your new car is pricier than your old one, a higher premium could be another cost to take into account.
Keep in mind that vehicles that are road legal in one place may not be in another. Polluting emissions are a big part of this. One common way to get burned when buying a car out of state is to purchase a car from a state with lower emissions standards than the state you live in. Then you get your new vehicle home and realize it’s illegal to drive locally. Oops!
If you live in one of the states that has adopted California’s Clean Cars legislation, then any purchase you make will need to meet or exceed the toughest emissions laws in the country. At present, the states included in this list are these ones.
- New Jersey
- New York
- Rhode Island
- The District of Columbia (not technically a state, but still counts here)
Be careful buying a car from a state not on this list. Their emissions standards might be different. If you’re in doubt, you can ask the seller to get an emissions test on your prospective new car. Then make sure the results will pass muster in your home state.
If you do end up buying a car sight unseen, you could have some additional, hefty expenses. This can include paying for a notary or the cost of having a car shipped to you. Shipping prices are normally determined based on what kind of car is being transported and where you live. It could easily be an additional $1000 or more.
Travel is another thing to keep in mind, which we already hinted at. It’s not just what you pay in gas, either. Consider lost wages if you would need to take a day off work to go evaluate or pick up the car. Or even just the mental and emotional strain of a lost weekend dealing with it. Or the time taken away from your family life or other errands.
If you live on say, the East Coast, where states are a little more tightly packed together, a road trip to buy a new car may be more feasible. However, driving from Washington State to Oregon is a bit of a different situation. When considering costs, your time and effort is a big one that needs to be taken into account along with the raw finances.
The Bottom Line
There’s no reason you can’t buy a car out of state. If you find a particularly good deal or are simply after a very specific make and model, your shopping options aren’t limited to your own state borders. However, just be prepared to do some extra work. You’ll likely end up committing more time (and extra money) to the process, compared to buying locally. However, it will all be worth it when you can finally park the car of your dreams safely in your driveway.
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