Legal Aspects of Buying a Car Out of State: Everything You Need To Know

You want to purchase a car out of state, right? It’s a fantastic idea, that way, you can easily save a lot of money. However, if you don’t know about many legal problems that can occur, then you can be in deep trouble before you know it. That’s why we’re here to help and explain what legal troubles you can potentially come across when you buying a car out of state.

Legal Aspects of Buying a New Car

Thanks to the Internet, finding a car in another state is extremely easy. You can google around for a few minutes and find a number of dealerships in the United States that will sell and ship a vehicle to your address in another part of the country.

That’s not all, you also have international sellers like Carzaty Kuwait that sell to buyers overseas. Now, let’s take a look at these issues in more detail so that you can make an informed decision when buying a car out of state.

• Signed Agreement

The car you buy must have current registration and title from the state it was registered to. If it doesn’t, you’ll need an agreement for transfer that’s signed by both parties.

• Vehicle Inspection

You are required to get basic vehicle inspections in your state, even if the car is new. If you want to get a used vehicle, be sure that there are no problems with it and that all recalls have been taken care of before buying a car out of state.

• Considering Insurance

Your insurance company needs to know where the car will primarily stay so they can offer coverage for when buying a car out of state or in your state. You also need to talk to the current owner and see if they have an insurance policy, so if anything gets damaged during transport, you won’t have to pay for it.

• Taxes and Fees

The tax rates for vehicles vary by local taxing areas, but will usually be around 12% of the purchase price, or $25 per year if you’re buying it from an individual. When buying a car out of state, you’ll also need to pay the following:

• Sales tax – between 0% and 17.25%, depending on your location
• Use tax – imposed by your home state if you don’t have a sales or use tax agreement with the other state
• Registration fee, which usually is between $50 and$60 per year, depending on the state

Buying a Car Out of State from a Seller

In order for a buyer and seller in two different states (or countries) to complete an interstate purchase transaction, there are three main requirements: The vehicle must be sold at “arm’s length” or from one private party to another; it cannot be transferred by a dealer; and the sale must take place in the other person’s home jurisdiction.

To do this successfully, both parties will have certain responsibilities they’ll need to fulfill before closing the deal. Below is an outline everyone should adhere to…

• Inspecting the Vehicle

The buyer will have to inspect the vehicle and its title, document all existing damage in writing, get an expert inspection of any major systems including tires, brakes, engine and transmission fluids as well as the working condition of the lights or turn signals. This may cost anywhere from $150-$400 depending on what is being viewed.

• Bill of Sale

The seller should provide a bill of sale with their signature stating that they are transferring ownership over to someone else free and clear without liens or encumbrances; provide a copy of a valid registration certificate if there is one available for you to see; sign off on odometer disclosure form showing mileage at date time sold (if applicable); release liability by signing indemnity agreement which states they are not liable for any damages that might have occurred during the course of ownership; provide a copy of their driver’s license and proof of insurance.

• Doing Your Own Research

If there are no registration documents, then check if it appears to be newer than 1995 by looking at the state sticker on the windshield or door jamb. If you do this, make sure you corroborate with your own research as well because many states now put stickers in other locations.

• Seller’s Record

The seller should also disclose whether they were ever convicted of a felony involving drugs, alcohol abuse, or fraud such as embezzlement against someone else. This is important so that you can avoid unknowingly purchasing stolen property from an individual who may still owe money to the original owner.

Why the Type of Car Matters

After doing some more research online about buying a car out of state, you instantly learn how much it really depends on what type of car. The car price isn’t the only factor you need to consider before buying a car out of state. You also have to take into account how much will be spent on vehicle registration fees and sales tax in another state. 

In addition, when buying a car out of state there are restrictions about which types of cars can be legally driven without an international travel permit or other special documents depending on where you’re driving from and where you intend to drive the vehicle back to.

Knowing what type of paperwork needs completing for getting a new license plate after buying a car out of state was actually really surprising since I didn’t know this could happen at all! To summarize everything I’ve found out through my research so far, it seems that the legality of this is up for debate.

The Bottom Line

Depending on where you’re driving from, what type of vehicle you buy and how long your stay in another state will be, there are many factors to consider when buying a car out of state.

The things we went over in this article should help you get a start. But remember, laws vary from state to state, which is why you should consult a legal professional before moving forward.