When new Model Ts were first rolling off production lines, no one would have considered traveling to another state to buy a car. But in today’s connected world, it’s not uncommon. Most dealerships have websites you can browse from anywhere, and car buying services make it simple to purchase the car of your dreams from your sofa.
But is buying a car from another state hard? Will it save you money? Let’s find out!
Can You Buy a Car Out of State?
Yes, you can buy a buy a car out of state, and there are some good reasons you might. In some cases, buying a car in a difference state can save you money or help you buy the car of your dreams. But buying a car in a difference state does require a few more steps than buying locally.
Pros and Cons of Buying a Car Out of State
Buying a car from out of state can be a great option, but it can also be expensive and time-consuming. Whether it’s the best choice really depends on your finances and whether you’re buying the car on your own or through a car buying service. Here are some of the pros and cons you should think about.
|Pros and Cons of Buying a Car Out of State
|Find the absolute lowest prices
|Access local promotions not available in your area
|Search a larger inventory of vehicles
|Won’t save on sales tax and may involve travel and shipping costs
|Supply varies from location to location
|More vulnerable to fraud
Pros of Buying a Car Out of State
The biggest advantage of buying a car out of state? You can make sure you’re getting the lowest price possible. You can take advantage of local promotions that might not be available where you live. And with access to more dealerships, you have a stronger position for negotiating the price of a car.
Another advantage to buying a car in a different state than the one you live in is that supply and demand vary across the country. That hatchback that’s hugely popular in your state — and therefore harder to find and more expensive — may not be so popular in the next state over. You’re also more likely to find special features you want if you shop a wider number of dealerships.
Cons of Buying a Car Out of State
Buying a car from a different state is less convenient and more complicated. Before you buy the car, you’ll need to ensure it meets your state’s safety and emissions standards — you may even have to pass an emissions test before you can register your car in your home state. Once you purchase the car, you’ll have to arrange to get it back to your home state either by driving or shipping it, which can add to the cost of the car.
One myth some buyers believe is that you can save on sales tax by buying out of state. This isn’t the case because you’ll pay sales tax in the state where you register the car, not where you buy it.
Another con of buying a car from out of state is it’s easier to defraud someone who can’t see a car up close. A seller might promise a car in great condition only to deliver much less than you expected — or nothing at all! Never pay someone for a car from another state without first visiting to inspect and test drive it.
How to Buy a Car Out of State in 7 Steps
Buying a car from out of state requires more work than buying locally. Here are the seven steps you’ll go through if you decide to shop outside your local dealerships:
1. Talk to Your Local DMV About Standards and Taxes
Every state has safety and emissions standards for the vehicles their residents drive. You need to understand what those standards are and whether a car needs to pass a safety inspection or emissions test before you purchase it. Otherwise, you may be required to make modifications you weren’t counting on before you can use your new car.
The DMV can also clarify what taxes and fees you’ll need to pay and how much they’ll cost. It’s good to know this information before you start looking for cars so you can consider it when comparing car prices.
2. Shop Online to Narrow Down Options
Start your search online to identify dealerships selling the make and model you want. You can easily compare prices, check reviews, and narrow down your options much faster than you would by visiting in person.
Once you’ve selected a dealership you want to work with, call ahead and set up an appointment to see the car. Ask the seller to hold the car for you and take all necessary paperwork so you can close on the car while you’re there. This includes financing documents like pre-qualification or pre-approvals.
3. Assess the Car’s Condition
Whether you’re buying a new or used car, it’s always important to know a car’s condition before you buy it, but that’s especially true when buying a car out of state. There are a few ways you can do this:
Test drive the car. Unless you’re a brand-new driver, you’ll recognize if a car drives poorly. Pay attention to strange noises, unusual vibrations, or any parts like the breaks or gear shift that don’t move smoothly.
Have a trusted mechanic go over the car. It’s worth the money it will cost to have an expert evaluate a car before you buy it. After all, once you’ve signed on the dotted line, you could be dependent on this car for 10 years or more.
Ask for a vehicle history report if you’re buying used. This report will tell you how many previous owners a car has had, whether any of its parts are subject to recall, if it’s been in any major accident, or if it’s had any major repairs done.
4. Insure Your New Car
Different auto insurance companies have different policies for when your coverage kicks in. Talk with your insurer to get the right kind of coverage for your new car. You may want to consider whether you need GAP insurance, too.
5. Register Your New Car
Many states require you to register your car within a certain timeframe or face fines and penalties. Depending on the state, that timeframe could be between 30 and 60 days of purchase.
An out-of-state dealership can usually help with your registration, but you’ll have to handle the paperwork yourself if you buy from a private seller. Make sure you get the signed car title and bill of sale from the seller so you have proof of ownership when you arrive at the DMV. (You’ll also need a government-issued ID like a driver’s license and a utility or tax bill to prove your address.)
6. Pay Your State’s Taxes and Fees
In most cases, you’ll pay sales tax in the state where you register a car rather than the state where you bought the car. A dealership can help you navigate this process, but you should discuss this with your local DMV ahead of time so you aren’t surprised with unexpected extra costs.
7. Decide How to Get Your Car Home
When you buy a car from another state, you have the option of driving it home or shipping it. Either option is going to raise the cost of your car — and may eat up any savings from buying out of state.
Driving Your Car Home
Driving your car home can be expensive when you consider the cost of gas, lodging, food, and lost time, but it’s often the cheaper option. You’ll need to get insurance and a temporary registration for your car before you can drive it home.
Shipping Your Car Home
Shipping is becoming a more popular option thanks to car buying services. Some of these companies will ship your car to their nearest lot and you can pick it up from there. Others will deliver the car right to your door.
The cost of shipping depends on how far the car has to be moved, the type of car, and the car’s size. Other factors like whether you went through a car buying company can affect the price, too. On average, it costs around $1,290 to move a car, with $630 being the low end and $1,810 being the higher end of shipping costs.
Out-of-State Car Buying FAQs
You probably have a lot of questions if you’ve never bought a car from another state before. Here are some common questions buyers have:
What Is the Cheapest State to Buy a Car?
The cheapest state to buy a car is usually Florida. Cars cost an average of 10% less in the Sunshine State, and there are lots of used cars to choose from.
In contrast, the most expensive state to buy a car in is California. In addition to a higher sales tax on cars than other states, California also has a smaller used car market.
If I Buy a Car in Another State, Where Do I Pay Sales Tax?
You’ll pay sales tax on a car in the state where you register it regardless of where you buy the car. That’s because sales tax (along with other fees for registration, title, and documentation) often go toward maintaining the roads you drive on.
There are five states that do not charge sales tax on cars: Alaska, Delaware, Montana, New Hampshire, and Oregon. If you purchase a car in these states but register that car in another state, you will have to pay sales tax to the state where your car is registered.
Buying a car from out of state may or may not be the right move for you. But now that you know how to do it, you can evaluate your options and decide what’s best for your situation.