Used car prices are up and inventory is down in the wake of the microchip shortage. Broadening your search radius is a smart way to help you find the car you want at a reasonable price in today’s market. As a result, buying a car out of state might be your best option to save money. And given that car prices vary geographically, you may find yourself wanting to cross state lines even when the car buying landscape starts to stabilize.
How do you buy a car out of state, and is it worth the hassle? We have the important answers to help you navigate the process of purchasing a car in a different state from a dealer or private seller.
Why Should You Consider Buying a Car Out of State?Similar to used car pricing , new-vehicle pricing may also vary across state lines . Manufacturer incentives can vary regionally, so you may find a better new car deal in a different state . Additionally, if you want a specific in-demand model or trim, it may only be in stock in another state. The same goes for classic or antique cars.
Just as pricing can vary by state, some cars are in higher supply in different states. For example, some electric vehicles are only released in certain states that have adopted a Zero-Emission Vehicle (ZEV) program. There may also be a higher inventory of used hybrids and electric vehicles in these states, increasing the likelihood of finding a good deal.
Vehicle popularity can also vary from one state to another. For example, four-wheel drive isn’t necessary in Southern states with temperate climates, so you may find a better deal on an all-weather vehicle in one of those states compared to the Northeast. Conversely, you may be able to find a better deal on a convertible in a state with a harsher climate, as they are in lower demand.
Lastly, buying a car from a neighboring state presents less obstacles than buying one across the country. When determining vehicle savings, be sure to take travel and lodging costs into account. Also, you may get to the dealership and realize the car isn’t for you after inspecting it. If you are travelling a great distance to look at a used car, make sure you do your diligence to ensure it’s worth the trip.
How to Buy a Car Out of StateNow that we’ve covered why it can make sense to buy a car out of state , here are the important steps you should follow:
Get a Vehicle History Report
If you’re buying a used car, you should always ask for a vehicle history report, whether buying in your home state or across a state line. A history report such as CARFAX or AutoCheck will detail information about the previous owner and any problems the car had (such as accidents, recalls, etc.) while in the other state. It will also provide the correct odometer reading. Understanding a used vehicle’s history will help shoppers determine the condition of the vehicle when deciding if it’s a smart purchase.Online research tools like the iSeeCars free VIN check can provide a free CARFAX or AutoCheck report as part of its comprehensive VIN check tool. The iSeeCars VIN check report will supplement the vehicle history report with additional, important information a shopper should know before making a used car purchase . Simply enter the vehicle identification number (VIN) on the iSeeCars VIN check tool to access the comprehensive analysis.
Get a Vehicle InspectionThis is another important step in buying any used car. You should arrange for a vehicle inspection by an independent local mechanic that you select and pay for. You can take the car to a mechanic during your test drive. (Check out our What to Look For When Buying a Used Car for more tips on making the most of your test drive.) This will provide assurance that the car is mechanically sound and has good fit and finish. The extra cost of a mechanical inspection is a good investment compared to the aggravation and hassle of figuring out what to do with a problematic car you didn’t see coming before you bought it.
As part of the inspection, you should ask if it meets the emissions standards of your home state. Be aware that some states have stricter emissions requirements than others.
Pay the Correct Sales Tax
If you buy a car from a dealer in a different state, the dealer will typically collect your sales tax and send it to your state’s tax collector. Dealers likely collect the amount required for the state of the dealership, so you will have to pay the difference if your home state’s taxes are higher. When the Department of Motor Vehicles in your state registers your new vehicle, they will likely check the bill of sale to make sure you paid the correct sales tax. Make sure you have your bill of sale when you register at your local DMV. Keep in mind that sales tax is collected for the state of residence, so buying a car in a state with a lower sales tax won’t provide you with tax savings.
How to Drive the Car Home
The dealer or seller will sign the title over to you and give you a temporary registration tag so you can drive the vehicle to your home state. If you buy from a private party, you’ll receive a signed title and a bill of sale that proves that you are the current owner. Because you won’t have a license plate on the car, you could be stopped by law enforcement on the way home. Show them your ID, and the title and bill of sale for the car. Some states will allow you to drive an unregistered car for a few days with a temporary trip permit, which will cover you until you can get the car registered. Be sure to check the rules in your state to determine the best course of action.
Get a State Inspection
In most states, an emissions test or smog test is required in order to get a car registered. You may have to do odometer and safety testing as well. Be sure to check your state DMV website to see what is required.
Register the Car
You will have a certain number of days to register the car at your local DMV. Upon registration, you will receive a license plate and a new title in your home state. In order to get your car registered, you will need the out-of-state title, proper identification, proof of address, and proof of insurance.
Get Car Insurance
Make sure the car is insured. Never attempt to drive the out-of-state car home without first calling your insurance company and having it insured. Accidents do happen and you don’t want to take the chance of being uncovered. Generally speaking, it will just be a matter of providing your insurance agent with the car’s year, make, model and VIN (vehicle identification number). The whole process takes minutes and can be handled while you’re at the dealership, waiting for the sales paperwork to be processed.Some insurance companies cover new vehicle purchases for a grace period before you add the car to your policy. However, if you’re financing the vehicle, your lender may require you to have specific insurance coverage in place before the loan can be issued. And some states will require dealers to verify vehicle insurance as part of the purchase process.
Bottom Line:Buying a new or used vehicle is a complicated process, and buying a vehicle in a different state can add another layer of complication. However, it can be worth the savings if you’re willing to take the extra steps.
Other Helpful Guides:
- Best Car Rankings
- How to Buy a Used Car
- Buying a New Vs. Used Car
- How to Negotiate the Best Car Price