Whether you’re in the market for a new or used vehicle, your options for the desired vehicle nearby may be limited. Especially now, with low new car inventory and inflated used car prices, it's a difficult time to buy any car.
Because of this, it can often be a better idea to try and purchase a car in a different state where the prices are lower, and your options are more varied.
However, when purchasing a car out of state, consider many things if you want to get a good deal and ensure you aren't getting scammed. And knowing what to look for before buying can help you get the best possible deal and allow for protection from fines and fees from vehicle registrars in different states and state and federal taxes.
Having all the paperwork ready and doing your due diligence can ensure that the purchase will work out well.
Why Buy a Car Out of State?
Before you decide to limit your new vehicle choices to cars available locally, it’s good to understand why purchasing in another state might be better. Depending on your area's local new and used car market, better deals could be available just over the state line. In addition, there are more ways than ever to look at what other places have to offer and bargains to get.
Only looking at cars near your area severely limits the selection. Rural areas, in particular, can be hampered by few choices and inflated prices because of the attraction to buying locally. So while it might pay to look in other parts of the same state, it might also make sense to look into another state if the distance isn't much more significant.
There may also be a smaller selection of new cars if you don't live near any dealerships, limiting options to third-party private sellers. That alone comes with its own challenges.
So these factors can make looking out of state for a vehicle much more attractive.
Widening the search area usually opens the door for better prices. For example, dealerships often have deals only available in certain states. As long as you factor in the added costs of buying a vehicle out of state could save a lot of money.
The market may also be quite different in a neighboring state than in a specific region. Because of this, it's easier to find better deals in areas where certain cars have less demand. An example is getting a work truck for a farm at a dense, urban area dealership. The demand is lower, so you could get a better price than you would in your state.
Specific Model Availability
When searching for your new car, you may have to look out of state if you have a specific model in mind. That's especially true if you are looking for a particular used car. To get the best possible deal and find what you want, you'll likely have to broaden your search and travel distance.
Nowhere is this more relevant than if you are looking to buy a rare or vintage vehicle. That's why using tools such as internet listings becomes imperative.
What to Consider When Buying a Car Out of State
If you have to purchase your vehicle out of state, you should consider a few things before deciding. First, factoring in the added costs and time can help you figure out if you are getting a good deal or not. It can also give you confidence in avoiding fines or fees when purchasing out of state.
You will need to pay state sales tax on your out-of-state purchase like any other taxable good. However, the sales tax rate will be for the state and county that the car will be registered in, not where it came from. So there's no incentive to buy in a state with a lower sales tax or no sales tax.
Depending on the state, you have a certain amount of time to register the car after purchasing it. The state's Department of Motor Vehicles or similar vehicle registry will require documentation from you, the vehicle title, and possibly proof of residency.
Once you have gone through the vehicle registration process, you’ll get new license plates or at least a temporary registration and a new vehicle title. Most likely, you will need to provide proof of residence at the DMV to register the car, such as a driver's license.
Before you leave the state to purchase a vehicle, make sure that your car insurance will cover it when you drive the car home. Some insurance policies extend to a new car as long as you inform them within a certain period. Contact the insurance company before purchasing to ensure that you will be covered and that your proof of insurance will be valid. Many dealerships require you to have insurance before driving off the lot, so it's best to have everything worked out beforehand if you're buying a new car.
States may have different emissions requirements and standards than the state you purchased the car in. For example, if your state requires a California Air Resources Board or CARB-compliant catalytic converter but the one you bought the car in doesn't, this will be an added expense to the purchase. And that's before getting an emissions test or smog check and registering the vehicle.
If you live in a state that requires a vehicle inspection to be registered, make sure a used or new car complies with all requirements. Check with the state's DMV or RMV to see what needs to be evaluated and whether the vehicle will pass the vehicle inspection. If not, this should factor into the final cost of purchasing the car since you may have to make some modifications or repairs before getting it registered in your state.
What to Do Before Buying a Car Out of State
One of the significant downsides of buying a car out of state is that you often don't get to look at it physically before making the trip. In addition, depending on where you live, it could cost a lot of extra money to get the car home, especially in a private party sale. There are, however, some things you can do that will give you an advantage and help you make sure you are making the right decision before you spend a lot of time and money.
Get a Vehicle History Report
One of the best things to do with any potential vehicle purchase is to obtain a vehicle history report. These reports are compiled using state DMV data, police reports, and service records. They give a good amount of information as to the car's condition and whether the seller is being transparent. Companies like Carfax and Autocheck allow you to enter a car's Vehicle Identification Number, or VIN, to get a detailed list of any incidents or collisions the vehicle has been in.
Get the Car Inspected
If possible, find a local mechanic before committing to purchasing any vehicle. If the car is in a relatively urban area, you will probably be able to find a mechanic who will travel to where the vehicle is and give it a thorough inspection. It's a great way to determine if the car has any issues and confirm that you have the correct VIN to get an accurate vehicle inspection report.
Work in the Cost of Transportation
Don't forget to factor in the cost of transporting both yourself and the new car home. For example, if you're going to be flying to get the car, you'll need to include the airline ticket price and fuel costs in the total price of buying the vehicle. Then compare that to hiring a vehicle transportation service to get the car trucked from another state.
If you are going to be driving, you will also need to figure out what to do with the old car. In these situations, purchasing a new vehicle from a dealership and arranging for a trade-in could be your best bet. Otherwise, investigate places such as Carmax that will take in trade without necessarily buying a car from them.
What to Watch Out for When Buying a Car Out of State
There are always things to watch for when buying a car. One of the downsides of purchasing a vehicle out of state is that you don't get to speak with the seller face to face. It can be an issue even if you are buying from a dealership. There are, however, some things to do to protect yourself.
Funds Transfer Services
In general, funds transfer services are a red flag for car buyers. If a dealer or seller wants you to send money to them through a third-party system like a wire transfer or other service, the odds are good that the car isn't what was described or didn't even exist.
Always try to purchase the vehicle in person with a card or check after viewing and test driving it. Even after making the purchase, be sure to get a bill of sale with an odometer reading to make sure your purchase has been recorded and get documented evidence that you're the one who bought it.
Vehicle cloning is a technique used by scammers and thieves to try and sell stolen vehicles. With cloning, the scammer will get the VIN from a car with the same make, model, year, and color as the car they've stolen. Then they'll give that VIN to you to check out the vehicle history report, and it will come up clean even though the actual unit they are selling has a checkered past.
Title washing is a method that scammers use to get designations off a car's title, such as "flood" or "salvage," so you don't know that the vehicle has significant damage. That's a reason to have any out-of-state vehicle you're thinking of buying inspected by a trusted mechanic.