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Buying a car is always an adventure—doubly so if you decide to take on the extra challenge of making the purchase across state lines.
When buying a car in your home state, you will need to work through the lengthy process of registering the vehicle and making sure that it meets your state’s standards before you can hit the road as a legal driver.
When buying a car out of state, you’ll have two sets of standards you’re required to meet—some vastly different and even contradictory.
Managing an out-of-state transaction can be complicated, but there are plenty of potential benefits to buying a car across state lines.
According to autolist.com, if you purchase a car in the 14 states (plus D.C.), which have adopted the standards set forth by the California Air Resources board, you can typically skirt the emission requirements.
We’ve compiled a list of everything you’ll need to know when buying a car out of state.
The Hidden Costs of Buying a Car out of State
Buying a car in a state different than the one you live in can have its benefits. For one thing, different states will have different requirements as to what you need to purchase along with the car, such as insurance and inspections.
Then there’s the fact that not all states are equal when it comes to the price of your purchase. California ranks among the costliest states in which to purchase a car, while Florida and Oregon are noted as the most affordable.
There are naturally many factors that play a role in determining the end price of a car—both used and new—including hidden fees.
Alabama is particularly notorious for slapping car owners with unexpected costs. Emily Delbridge, with The Balance, reports buyers in Alabama pay an average of over $2,000 in hidden fees on vehicle transactions.
By contrast, Oregon tends to be more transparent, which is one reason it tends to be popular among those looking for cars in states other than their own.
Before you commit to an offer, be prepared to manage the purchase by investigating the most common areas of confusion for vehicle buyers.
Everything You Need to Know About Sales Tax
You’ll typically have to pay sales tax on a new car in the state in which you ultimately register your vehicle.
If you live near states that don’t charge sales tax on cars—Alaska, Delaware, Montana, New Hampshire, and Oregon—you might think you’ll be clever and buy your car there, avoiding sales tax altogether.
You will, however, be disappointed to find out that you can only take advantage of those benefits if you register the car in a state that doesn’t charge sales tax.
Do I have to pay taxes twice if I buy a car out of state?
According to Autolist, This is one of the most common questions posed by prospective car buyers. The answer is, most likely, “no.” When buying a car from a dealer in another state, they will typically send the necessary purchase information to your home state.
Taxes, total purchase price, and other key details will vary for every transaction. Take the time to inspect each seller—private and dealerships—on an individualized basis. Be sure you understand the sales tax requirements for your state and the state in which you will be purchasing.
Understanding the Vehicle’s History
One of the most important steps to take when finalizing any major purchase is clearing the car’s history.
You don’t want to cross state lines for a better deal on a car only to wind up with a dangerous or illegally sold vehicle.
To prevent unpleasant surprises, turn to sites like CarFax to get all the “car facts” about the vehicle in question before you sign on the dotted line.
You should plan to have any car you’re considering to purchase cleared by a trained mechanic, either in conjunction with a car history clearance site or on your own. Even if you fancy yourself a car whiz, you’ll want the opinion of and a clean bill of health from a trained, independent auto expert.
Accidents in the vehicle’s history aren’t the only things that should catch your attention as a discerning car buyer. If you find anything fishy in the car’s financial history, you’ll definitely want to ask the seller to clear up your questions before finalizing the sale.
Does the car in question have a history of being used as a lien or as collateral for loans? This may seem innocent enough on the surface, but dig deeper, and you could find evidence of larger insolvency issues on the part of the seller, which could put your purchase at risk.
It’s entirely possible that the car you think you’ve scored for a great deal could be repossessed right out of your driveway because the seller skipped out on a loan. If they have—surprise!—they’ve passed that, along with the car, onto you.
Make sure you check out a car’s history, but that of the seller as well.
Another aspect of car buying that might trip you up if you try and buy a car across state lines without doing your homework first is emissions.
When you purchase in-state, this doesn’t tend to be too much of an issue because the sellers have already had to pass an inspection to make sure they are in compliance with your state’s emission standards.
When you decide to purchase a car across state boundaries, however, you take that responsibility into your own hands. You do not want to be fined or stuck with costly repairs because your car fails to meet emissions standards.
According to The Balance, you’ll want to check under the hood and see if the car in question has been passed an emissions inspection.
If you don’t see a current inspection sticker, you’ll need to bring your car into a service garage and have an emissions test performed to get the car officially cleared.
While California rates on the higher end of the price scale for used cars, it balances those costs by virtue of the fact that cars cleared for emissions standards by the California Air Resources Board (CARP) are often pre-cleared in other states.
Knowing whether or not your car has been cleared by CARP is sometimes as easy as looking for the CARP clearance sticker underneath the hood. Getting a car that’s “California Cleared” can be one of the easiest ways to reduce or avoid potential emissions headaches.
All About Insurance
Even with a CARP certification, you’re still not done. After you complete the transaction, you will need to ensure your vehicle for the trip home.
As alluded to at the beginning of this article, car insurance is yet another cost that will vary from state to state. You’ll want to compare the rates for insurance in states like Oregon versus Alabama.
While you probably won’t be flying thousands of miles just to save a few hundred dollars on auto insurance, in the case of neighboring states like California versus Oregon, where the latter’s average used car prices are often far lower, crossing state lines might be worth considering.
Sites such as NetQuote.com and Insure.com provide excellent, in-depth analysis concerning the different rates charged by different states regarding auto insurance. The online nature of these resources can be especially helpful when it comes to obtaining the latest deals and information.
Laws Governing the Purchase of Cars Out of State
Before you start crossing state boundaries to nab a better auto insurance deal or avoid hidden fees, you’ll first need to check your own state’s laws regarding interstate auto purchases.
You aren’t the first person to think about buying cars in other states, and your home state may have laws regulating these purchases, or even charging extra fees as a penalty.
If you purchase a car in a state different from your home state, you’ll likely need to get a temporary vehicle registration to get the car back home. At home, you’ll need to make sure the registration information has been transferred by your dealer or re-register the car in your home state.
How to Buy a Car out of State
Step 1: Evaluate the Offer
Once you have gathered all the information about the car and related costs, you’ll be in a position to evaluate the offer. Don’t forget to consider the hidden costs mentioned above.
Do not assume that the price you see is “all” you’ll have to pay. Now that you know the hidden costs that come along with the process, such as state taxes and transportation fees, be sure to factor the additional fees into your calculations.
Be sure to understand exactly where your costs are coming from and put in the effort upfront to understand the hidden costs associated with vehicle purchases in many states. Some of the potential hidden costs when purchasing across state lines include:
- The cost of transporting your new vehicle back home—which, according to CreditKarma.com, you can sometimes negotiate away when buying from a dealer.
- Fines and penalties in your home state and the state of purchase designed to discourage sales of vehicles across state lines.
- Documentation fees—or fees levied by dealers in some states which help a dealership offset the cost of preparing the paperwork associated with a sale. This is a non-negotiable fee in some states and can range from a few dollars to several hundred.
- Title and registration fees—These vary by location and can be levied by both your home state and in the state where the sale takes place.
Step 2: Determine Your Method of Financing
When buying a used car out of state from a dealer, check to make sure they are officially accredited. You don’t want to buy from a dealership that is less than scrupulous about how it sells and receives the cars on its lot.
When buying a used car out of state from a private seller, you’ll likely have to take on even more responsibilities in terms of getting your car legal in your home state.
Dealers often take on responsibilities such as emissions tests, but private sellers are able to operate with more freedom than dealers.
If you are purchasing from a private seller, you’ll want to consider taking out a private party auto loan to help facilitate the deal and protect your financial interests.
Which option is best for you will ultimately depend on the particular deal you’ve been offered.
Due to the wide variation of laws governing these bodies, sometimes the pendulum might swing in favor of dealers on key issues, and, on other issues or in other states, it might swing back toward private sellers.
According to Auto Trader, in some states, sales tax only applies when it comes to the difference between trade-in vehicles and the one you are purchasing, in which case they can be far more cost-effective than private sellers.
On the other hand, there are other instances where private sellers are able to avoid regulatory costs and offer better value.
Step 3: Collect Your Documents and Locate Necessary Forms
As mentioned above, you will need both your insurance and registration information handy to finalize your deal.
Before you sign anything, you should have your permanent as well as temporary registration, long-term car insurance, and insurance for transporting the vehicle back across state lines.
If you need any additional forms or documents to acquire those papers, you’ll need to make sure you have adequate time to get them. Don’t wait until the last minute.
Step 4: Understand the Timeline for Processing Registration, Insurance, and Inspections
That “don’t wait until the last minute” edict goes for the process of buying a car out of state as well. You need to have a clear idea of how long each item on your Car Clearance Checklist may take.
Below you will find the typical timelines for the most important documents.
- Registration: On the outside, this can take four to six weeks.
- Insurance: While you can get quotes within minutes, finalizing everything can take several days.
- Inspections: These should only take a day, but you will need to make an appointment with the mechanic.
Step 5: Schedule the Transfer with the Seller
Now that you’ve finally cleared the major hurdles, it’s time to schedule the transfer with the seller. Make sure that the time frame fits your needs to ensure compliance, and that you have all of your information prepared and ready to go.
Purchasing a vehicle across state lines can offer many benefits—if you do it right.
On the plus side, you can gain access to a broader selection of vehicles and better deals than you might be able to enjoy if you were to only shop for cars within your own state.
But, buying across state lines means you are susceptible to hidden costs. Things are not always what they appear in the interstate car selling game. The last thing you want is to be hit with thousands of dollars in unexpected fees.
That said, if you know what to look for, you can take advantage of great interstate car deals.