Guide to Buying a Car Out of State

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Crossing state lines to buy a car might help you get a better deal, but the process can differ from a vehicle purchase in your own state.

Whether you live close to a neighboring state and want more options or are considering buying a car online and traveling to another state to pick it up, it’s important to understand what you may face when you bring your new vehicle back to your home state.

Let’s review some common issues you should prepare for when you buy a car out of state, including registering your new car, paying any sales tax and undergoing safety inspections or emissions tests.

What to consider before buying a car out of state
Pros and cons of buying a car out of state
Tips for buying a car out of state

What to consider before buying a car out of state

Purchasing a car in a different state can make your transaction more complicated, but knowing what to expect before you start shopping can relieve some of that stress. Here are some things to research ahead of time.

Sales tax

You’ll generally pay sales tax on your new car in the state where you register it. If you’re thinking about buying a car in a state that doesn’t charge sales tax — Alaska, Delaware, Montana, New Hampshire or Oregon — you may only get those savings if you register your car in that state.

Many states require you to register your vehicle in the state where you live. Check with your state’s Department of Motor Vehicles beforehand to understand its policy.

Registration

Before you register your vehicle, you may need a temporary registration if you’re planning to drive the car to your home state.

If you’re buying the car from a dealer, they can often help you with the registration paperwork. But if you’re buying from a private seller, you’ll probably need to know the state’s requirements for a temporary registration and apply for it at the DMV yourself.

When registering the car in your home state, note that you may need to submit a vehicle identification number, or VIN, verification form to ensure that the car hasn’t been stolen.

Emissions

Each state has different emissions requirements, so a car that passes one state’s minimum standards may fail in another. For example, California set strict emissions standards through the California Air Resources Board, and several other states have followed suit.

Check if the car you want to buy is “California certified,” which means it’s made to meet California smog regulations. Many vehicles are only manufactured to be sold in the other 49 states and meet federal emission rules.

Transport

If you’re planning to drive the car back to your home state, you’ll want to get a temporary registration to make the car permissible to be driven first. But if you’re planning to ship it, you may need to do some research to find a reliable shipping company at a reasonable rate.

If your car purchase is a dealership transaction, ask your dealer if they have relationships with companies that can ship your vehicle. Otherwise, spend some time vetting different options to ensure you find the best deal for your circumstances.

Car insurance

Depending on your current car insurance policy, you may or may not need to get coverage for your new car before you buy it. With some insurance companies, your current coverage extends to a new vehicle purchase, as long as you notify the insurer within a certain timeframe that you bought a new car.

But some policies don’t offer this extension, so you’ll want to have the coverage in place before you make the purchase. Also, if you’re financing the vehicle, lenders will likely require certain types of insurance, such as comprehensive and collision insurance.

Pros and cons of buying a car out of state

Before you start shopping for a new car, it’s important to consider both the benefits and drawbacks of buying a car out of state.

Pros

If you’re looking for a rare model, you may have a hard time finding the right car if you restrict your search to your state alone. Crossing state lines may give you a wider selection to choose from.

What’s more, car valuations are based on several factors, including where the car is located. It’s possible to find exactly the same model in another state with a lower sales price than what your local dealership is charging. By expanding your search, you’ll have the opportunity to compare more prices and potentially save money. Just remember to take estimated sales tax into account, too, which can vary based on where you’re registering the vehicle.

Cons

The main drawback to buying a car out of state is that the process can be more complicated. Each state has its own requirements for sales tax, registration and emissions.

You’ll also need to figure out how to get the car back to your home state. If you live close by you can drive, but you may need to get a temporary registration. If the car isn’t nearby, you may need to ship it, which adds more costs that can eat into any potential savings.

Tips for buying a car out of state

If you want to buy a car out of state, plan to see the car in person before you make your decision. Otherwise, you might find that the car has more defects than the seller let on.

By going to see the car in person, you can check for visual defects. Read the vehicle history report and consider taking the car to a local mechanic to make sure it runs as well as advertised.

If you’re buying the car online or can’t go see it in person, try to work with only sellers that have a buyer’s remorse policy. Carvana, for instance, provides a seven-day test drive period, giving you the chance to make sure there aren’t any problems with your purchase. Just keep in mind that there are limits to this offer, so make sure to read the fine print to learn more. If you find something wrong or decide the car isn’t right for you, Carvana may let you return it and get your money back.

Bottom line

Buying a car out of state can help you save money in the right situation, and it may be the best way to get the model you’re looking for. But making the necessary preparations can take time, so plan ahead before you purchase.

Research the different laws and requirements your state has for out-of-state vehicle purchases. Have a plan beforehand for insurance and transportation and find out if the seller offers a window of time in which you can return the vehicle if it isn’t what it was advertised to be.

Finally, as you consider how much car you can afford, make sure you know all of the costs included with buying a car out of state so that your new vehicle fits your budget.

About the author: Ben Luthi is a personal finance freelance writer and credit cards expert. He holds a bachelor’s degree in business management and finance from Brigham Young University. In addition to Credit Karma, you can find his wo… Read more.

Your guide to buying a car out of state

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