What You Need to Know About Buying a Car Across State Lines
The United States of America is one country—one country made up of 50 separate states that are allowed to make rules and regulations that are in each state’s best interest. These rules and regulations affect you buying a car. With 109 borders between states, chances are you may find it more convenient, or at better price, to buy a car on the other side of a state line from where you live. Before you do, here are a few things you should know.
Some states don’t have sales tax, and that can be a motivating factor in where people buy items. Unlike school supplies or new TVs (you’re actually supposed to pay your home state’s sales tax on those, in most cases), cars require more paperwork, and you can’t hide them. In most cases, you pay tax on the vehicle based on the location it is garaged.
Laws are going to vary state to state, however, most of those are going to be how soon you have to pay tax on your new vehicle. If you’re buying from a dealership, then your salesperson will most likely help you navigate the paperwork, taxes, and fees. Even though you’re buying out of state, they should have access to all the needed documents. Most likely, you’re not the first person who came across state lines to buy a car.
If you’re making a private purchase, make sure you do your homework beforehand. Nothing is worse than making a big purchase and being surprised by a cost you didn’t expect.
What would my auto payments be?
Many factors go into determining the final loan amount for the purchase of a new or used vehicle. These factors include any manufacturer's rebate, the trade-in value of your old vehicle less any outstanding balance, your down payment, etc. Once the loan amount is determined the interest rate and the term of the loan will be used to estimate your vehicle payment.
Title and registration
When you buy a used vehicle in your home state, depending on the state, you can wait to change the registration until the current one expires. Buying a vehicle out of state almost universally requires an updated registration within a set time. Be sure you know that timeline before you start the clock with your purchase.
The title is going to vary state to state, also. Again, if you buy from a dealership, they will most likely help take care of this as part of the buying process. On a private purchase, you’ll need to do your homework.
Insurance laws vary from state to state. Some will let you keep the vehicle under an old policy until you get it home, others may require a full changeover, and some places might require transport insurance. A call to your insurance agent is your best bet to sort it all out. Make that call before you even go looking.
A lot of states have vehicle inspections. Some forego inspections on new vehicles purchased in the state. That means there is a chance you’ll need your out-of-state purchase, even if it’s brand new, to be inspected before you can register it.
Inspection laws vary drastically from state to state. Be sure to know what hoops you’re going to have to jump through before you go shopping to speed up the process
Fraud is everywhere. Your vehicles are most likely the most expensive thing you’ll purchase besides a home. Buying out of state because you found a good deal isn’t a bad idea in and of itself. But there can be dangers associated. These can still happen in state, but dealing with law enforcement is easier when you’re local.
Watch out for:
- Cloning – If a used car is too good of a deal, it probably is. Car thieves will steal a car, then replace the VIN tag with one of an exact make, model, year, and color. Run the VIN through a search engine and if any of the data is off, ask more questions.
- Title washing – If a vehicle has been in an accident or has had any significant damage from weather, that information is attached to the title. Con artists will scrub that data from the title and sell the car as problem-free. Always ask for a vehicle history report and look it over; if the mileage or number of previous owners seems odd, ask more questions.
- Third-party transfer service – Fraudsters will often add extra steps to a process to hide their end goal: taking your money. If you’re buying a vehicle and the seller won’t directly take your money, walk away.
Hopefully, this helps you when you’re looking for your next vehicle. It can be helpful to make a checklist before you even start looking to make sure you have all your ducks in a row.
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