Buying a car out of state involves getting the car’s history, having it inspected, paying, registering it, insuring it and paying the sales tax. The main differences between in-state and out-of-state car purchases involve sales tax, inspection and registration regulations — as well as how you’ll get your new car home.
Why buy an out-of-state car?
Shopping for a vehicle out of state has a number of advantages.
Larger selection. A wider marketplace means greater choice, and this could really matter if you’re looking for a rare or antique vehicle — or even a particular model or color that isn’t in stock in your state.
Potential savings. You may be able to get a better price on the car you want if you’re willing to travel farther afield. Some dealers may be running discounts or promotions on the specific model you’re looking for, and states may use different pricing standards, which could translate to lower prices. Additionally, you may also be able to find private sellers with lower-price offerings in other states.
Convenience. You can shop online for cars located all across the country, from the comfort of your home. Some out-of-state car sellers may be willing to ship your new car right to your door.
The downside of buying a car in a different state
Before buying a car out-of-state, there are three big considerations to be aware of.
You have to figure out how to get your car home. If the seller isn’t willing to ship the car to you, you’ll either have to pay to have your new car shipped or drive it home yourself after getting a temporary registration. Transportation expenses may offset any savings you gain on the purchase price, particularly if it involves a cross-country trip.
The process may be more complicated. It may be more timely and complex to get a car from out of state inspected and registered in your own state. Since emissions requirements vary between states, a car that passes inspection in the purchase state may fail in your home state.
You may have to buy sight-unseen. Unless you travel to check out the car you’re considering, buying an out-of-state car could mean committing to purchase a car you’ve never even seen in person. If you purchase remotely, you may have to deal with the additional expense and time involved in finding a trustworthy mechanic in the area to inspect the car and verify that it’s in good running order.
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How taxes work when buying a car in another state
Unless you live in a state with no sales tax, you’ll probably owe sales tax on the out-of-state car — and you usually won’t owe less if the state you purchase the car in has a lower sales tax rate than your home state. This is because, in general, you owe sales tax based on the state where you live and register the car, rather than on where you make the purchase.
Paying the sales tax shouldn’t be all that difficult.
Often, you pay what you owe when you register the car at your local DMV.
If you purchased your car from a dealership rather than a private seller, it may be even easier — the dealership may collect your state sales tax when you pay for the car, and then remit the funds on your behalf to your home state.
🤓Nerdy Tip
In addition to sales tax, some states (including California and Texas) also charge a “use tax” on vehicles brought from other states. In general, you pay this additional tax when you register your car at the DMV.
How registration works when buying a car in a different state
When you purchase a car in a different state, registration (like taxes) follows the laws and practices of your home state. If you’ve purchased your car from an out-of-state dealer, registration is relatively simple. The dealership will likely handle the details to get your car registered according to the regulations of your home state, as well as give you a temporary registration tag so you can legally drive your car back home.
It gets a little more complicated when you buy from an out-of-state private seller, because you have to deal directly with your local DMV. You may need to show the following:
Signed title (or manufacturer’s certificate of origin) to prove you own your new car.
Application for a temporary registration (in order to drive the car home legally and continue driving until you’ve fully registered it).
Proof of safety and/or emissions inspection (depending on your state’s regulations).
Payment for the sales tax you owe as part of your registration process.
Is it worth buying a new car out of state?
Whether it’s worth it to buy a car in another state really depends on how good a deal it is and whether you’re willing to jump through extra hoops to make it happen.
Here are a few questions you can ask yourself to help you decide if out-of-state car buying makes sense for you.
Do I have the time, money and energy to travel to another state?
Am I willing to purchase a car sight-unseen if I can’t travel to check it out myself?
Will the cost of getting the car home offset the money I’ll save by going out of state?
Am I willing to deal with the possibility of a more complex registration process?
Can I find the car I want at a fair price closer to home?
Can I afford shipping costs if the car is too far away to drive it home myself?
Do I know a qualified mechanic willing to travel to the out-of-state car to verify that it’s mechanically sound?
