Though it’s possible to buy a vehicle from out of state, there are a number of things to consider before taking the plunge. A common misconception people have is that you can save money by purchasing a vehicle in a state with lower taxes. If you have bad credit, another thing to consider is whether or not you can qualify for subprime financing at an out-of-state dealership.
Sales Tax Collection
Unfortunately, purchasing a car out of state won’t save you money on taxes. Vehicle sales are taxed differently in different states. Some states have vehicle sales tax, while others don’t. In some states with vehicle taxes, a whole or partial trade-in value can be deducted from the price of a new car, and taxes are then calculated on the remainder.
A dealership outside your state will be either reciprocal or non-reciprocal. Reciprocity agreements between states will determine whether or not a dealer will collect sales tax for an out-of-state buyer. If you're purchasing from a dealership in a reciprocal state, they'll take care of this detail and forward the taxes on to your home state.
If the purchase state is a non-reciprocal state, it’s a good idea to have the dealer roll the amount of your taxes and fees into the cost of the car. When this is done, that amount can then be given back to you in the form of a check, which you can take to your state’s DMV for registration. This practice will help you avoid unexpected fees paid out of pocket.
Keep in mind that vehicle sales taxes, title fees, and registration fees are always based on your home state, not the purchase state.
Emissions and Inspection Requirements
You'll have to research smog and emission regulations in your state. All states' regulations on this vary. However, California has the strictest emissions standards of all the states. These days, many vehicles are manufactured to meet California air quality standards. Another 14 states have adopted the standards set by California, and purchasing a car in any of these states would meet the emission requirements in all 50 states.
Another thing that differs in all states is inspection requirements. For example, some states, like Pennsylvania and Texas, require periodic safety inspections, while states like Florida and Michigan don’t require any. So, make sure you know what’s required in order to get your vehicle registered.
Residency Requirements for Poor Credit
When you have bad credit you will need to find a special finance dealer who works with subprime lenders. Though many dealers across the country offer this service, some lenders have residency restrictions which apply to purchasing. This can become a problem if you're thinking of buying outside your state. It’s important to research both the dealer and the financing you have in mind so you won’t come away empty-handed after a long road trip.
The Bottom Line
Just because you can purchase a car from out of state, doesn’t mean you need to. If you're struggling with credit issues, there's no need to search far and wide for a dealer that can help you. Let Auto Credit Express point you toward a dealer in your area.
We work with a nationwide network of special finance dealers, and they have the lenders available to help people in many challenging credit situations. Don’t delay, fill out our free, no-obligation online auto loan request form to get started today!