Buying a Car Out of State: A How-To Guide
Buying a car out of state can open up some great options, like finding the car you want at a lower price or locating a hard-to-find model. However, the process can be a bit of a challenge to navigate. Car buying out of state involves additional paperwork, and it could expose you to more scams than if you kept your search local. Here are the things you need to know before you offer your hard-earned money for an out-of-state car.
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How to buy a car out of state
The basics of buying a car out of state are the same as in your state of residence. But as the saying goes, the devil is in the details. Follow these steps so you don’t get tripped up along the way if you plan to cross state lines to pick up your new ride.
Get a vehicle history report
For used cars, the importance of reading a vehicle’s history report (VHR) or conducting a vehicle identification number (VIN) check cannot be overstated. A VHR could raise red flags for you to bring to the attention of the seller, while a VIN check can uncover information about the car’s ownership history, accidents and recalls.
- CarFax: Services like CarFax, AutoCheck and AutoDNA will tell you the ownership history, title status and service history of the car, along with any accident data. Many dealerships will provide a VHR from one of these sources for free to potential buyers, though you could also purchase one on your own.
- National Motor Vehicle Title Information System: Available in most states for a minimal fee, this report can help you confirm the accuracy of important information on the car’s title, like its odometer reading, theft history and salvage or flood damage records.
- Safety recall lookup: This free search uses the car’s VIN to determine whether there are any outstanding recalls that need to be repaired. Manufacturers will do recall repairs free of charge, but it’s an important detail to know before purchasing a car.
Arrange a prepurchase inspection
In addition to verifying the history of the car you want to buy, you should also arrange a prepurchase used car inspection. While a VIN check can tell you how many owners a car has had or if it was ever salvaged, it won’t tell you anything about the current status of the car’s engine, systems or overall condition. Only a trained mechanic can give you the in-depth knowledge about the vehicle’s health that you’ll need to know before you buy it.
Reputable sellers should be willing to allow a mechanic to perform an inspection on the car before you commit to the purchase. If not, that could be a red flag.
Negotiate the deal
Negotiating the price of a car probably isn’t your idea of a good time — but the money you may be able to save can make the effort worthwhile. Whether you’re buying a new car from a dealership or a used vehicle from a private seller, you should always try to get a better price than the first one you’re offered. Your negotiations are more likely to be successful if you’re buying a widely available car, like a run-of-the-mill sedan, rather than a unique, one-of-a-kind vehicle.
Watch for scams
Unfortunately, if you’re buying a used car from a private seller, you’ll have to be watchful for scams. While the majority of sellers are on the up-and-up, scams are prevalent in the used-car world. Here are some of the most common:
Odometer rollbacks
This type of scam is becoming less common, thanks to electronic odometers and CarFax reports, but it does still happen. Unscrupulous sellers will lower the odometer reading to make a car seem less used than it is, thereby unfairly increasing its selling price.
Title washing
A title-washing scam involves taking a legitimate title and removing negative information, such as a car’s status as a salvage vehicle. You can defend yourself against this scam by getting third-party reports and verifying that they apply to the vehicle you are purchasing.
VIN cloning
VIN cloning is a form of fraud that involves removing the valid VIN from a stolen or salvaged vehicle and replacing it with a “clean” VIN from a legitimate one. This type of fraud can be more difficult to detect if the characteristics of the vehicle with the clean VIN match the car that you’re intending to buy.
Wire transfer fraud
If you’re asked to wire money to pay for your car purchase, think twice. Wire transfer scams are common because once you’ve sent the money, it’s almost impossible to get it back. A wire transfer is even riskier than handing over cash, as you likely won’t have any idea where your money went once it’s been sent.
Get the car insured
It’s a good idea to begin the insurance process before you complete the transaction, so your new car will be insured for the trip back to your home state. Call your insurance company before you buy the car and provide all the details about your pending purchase. Be sure to shop around for the lowest rate, and remember that your insurance rate will be based on where you live, not where you bought the car.
Complete the transaction
If you plan to finance your car purchase from a dealership, get preapproved for a car loan before hitting the showroom floor. But if you’re buying from a private seller, you’ll need a private-party auto loan, money order or cashier’s check.
You’ll need to complete the paperwork and pay taxes on your transaction. Your seller should sign over the title to you and file the appropriate forms for the transfer of ownership with the DMV. You’ll have to pay the registration and taxes directly to your home state, not the seller’s state. If you work with a dealer, they should do most of this work, but if you deal with a private party, you’ll have to do most of it yourself.
Buying from a private seller
The most important thing to remember when buying from a private seller is that you’ll be responsible for much more documentation than if you worked with a dealer. You should also watch for scams, verify the history and condition of the car and avoid sending money via wire transfer.
Buying from a dealer
Buying from a dealer will generally make your transaction easier, since you won’t be responsible for filing much of the required paperwork. However, you’re likely to pay more for your vehicle than you would with a private seller.
What to consider before buying a car out of state
Buying a car out of state could be a smart move if you get a great deal. Still, there are some unique circumstances to keep in mind when buying a car from a state other than your own.
Emissions laws
Buying a car from a different state doesn’t exempt you from the emissions requirements of your own state. This can be especially tough for those who live in states like California, which have some of the country’s strictest emission standards. Some states require a safety inspection that includes emissions testing before the vehicle can be registered, so be sure that your new car can pass your home state’s requirements.
Your home state’s requirements
In addition to emissions testing, your state might have additional laws that don’t apply to the state where you bought the car. For example, modifications like window tinting may not be allowed in your state, and the same is true of having a front license plate.
Temporary registration
If you buy a car in another state, you might need a temporary registration until you get it back to your home state. Dealers typically provide this service, but private sellers likely won’t.
Although you won’t be breaking the law, you may have to show the officer your bill of sale and proof of insurance if you get pulled over to prove that you legally own the car.
Sales tax
When you buy a vehicle out of state, you’ll owe sales tax on the purchase in your home state. Even if you buy a car in a state without a sales tax, you’ll still have to pay tax to your state of residence. The good news is that you won’t have to pay taxes in both states.
Getting the car home
One of the negatives of buying a car out of state is that you’ll have to figure out a way to bring it back home. While driving can be an option, you may not want to put that many miles on your new car. In that case, you’ll have to hire a vehicle transport company, which could cost anywhere from $500 to $1,700 or more.
Frequently asked questions
Regardless of where you buy it, you’ll pay sales tax in the state where you register the car — which is your state of residence.
It certainly can be cheaper to buy a car out of state (in fact, that’s one of the main reasons why buyers look out of state for cars), but this is far from a certainty. The type of car, the current market conditions and your own skill as a negotiator all play a role in the final price of your car.
Transport is often the biggest additional cost you’ll have to factor in when buying a car out of state. In some cases, it may even negate any additional savings you found.