Do I Have To Pay Sales Taxes Twice If I Buy a Car Out of State?

When buying a car in another state, you don’t have to pay sales tax twice. You pay sales tax when you register the vehicle in your home state (unless you’re in a tax-free state). It gets a bit more complex than this, but we go over all the nuances below.
In addition to state sales tax, you’ll probably also owe additional taxes and fees related to registration, license plates, title transfer, and city or county taxes.

If I Buy A Car In Another State, Where Do I Pay Sales Tax?

When purchasing a vehicle in another state, you will pay the sales tax when you register and title the car in your home state. The sales tax rate you pay will be based on the rate in your home state, not the rate in the state where you purchased the car.

For example, if you live in Delaware with a 0% sales tax rate and purchase a car in Maryland with a 6% sales tax rate, you will not pay any sales tax to Maryland.

Unless you need to get a temporary registration in the state of purchase. That complicates things.
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What if I Need Temporary License Plates and Registration?

In most states, you won’t be able to drive your car back to your home state without a temporary registration and plates. But, if you get temporary license plates to drive the car home, the state of purchase may require paying their sales tax upfront. If that is the case, things get a bit more complicated:

1. In the seller’s state, you’ll pay that state’s sales tax rate on the vehicle purchase price to get the temporary registration and plates.
2. If the seller's state has a lower tax rate than your home state, you pay the difference when you register the car back home.
3. If your state has a lower tax rate (or doesn’t have sales tax), you will not get your money back.

Either way, you won’t be double-taxed—but you could end up paying more tax than if you didn’t get the temp registration.

The most obvious solution: don’t drive the car back. With PrivateAuto, you can easily buy a car remotely and have it shipped. No temporary registration needed.

Looking to buy an out-of-state car? Get a fast car transport quote here.

How to Report an Out-of-State Vehicle Purchase?

When you register your new-to-you car in your home state, you will need to provide the out-of-state title and seller's bill of sale as documentation. Some states also require a vehicle identification number (VIN) inspection to verify the car's identity before registration.

Be prepared to pay the applicable registration fee, license plate fee, and sales tax. The full registration and titling process can take several weeks. Some states issue temporary license plates while the paperwork is being processed.

Reach out to your local DMV for specific regulatory and documentation requirements. Follow the proper procedure to avoid penalties and ensure your out-of-state purchase is correctly taxed and titled.

Are there Penalties for Not Reporting Out-of-State Purchases?

Your should always report your out-of-state purchase as such. If the DMV finds an unreported out-of-state vehicle through audits or VIN checks, consequences can include:

Fines from $500 to over $1,000 depending on the state
Suspension or revocation of driver's license
Possible criminal charges for tax evasion
Seizure or impoundment of the illegally registered vehicle

Save yourself the trouble. Do it right from the start by fully reporting your out-of-state purchase when registering the vehicle. Paying applicable taxes is a small burden compared to large fines and legal issues.

What are the Strategies to Minimize Fees on Out-of-State Purchase?

When buying a car across state lines, here are the best money-saving approaches:

1. Buy from a private seller rather than a dealer
2. Hire an inspector as your remote purchasing agent
3. Have your car shipped to you

Buy From a Private Seller Rather Than a Dealer

A lot of people mistakenly believe that buying a car from a dealer saves money. The opposite is true: going to a dealer costs you more money.

Avoid extra fees. Dealerships charge documentation fees that range from $50 to over $1,000.
Get a better price. Avoid the middleman markup.
You have access to a wider pool of potential sellers if you buy privately. More cars to choose from, at better prices.
You drive the deal on your terms: PrivateAuto allows you to make offers and negotiate the best deal directly with the seller.
In some states, buying from a private seller means no sales tax. For example, Hawaii and Nevada charge sales tax on retail (dealership) car purchases, but not on private-party ones.

We do admit that dealers bring a certain amount of convenience that you don’t traditionally get when you buy from a private seller. That’s why we exist. PrivateAuto gives you dealer-like convenience in the palm of your hand while allowing you to transact peer-to-peer with regular folks like yourself.

Hire an Inspector as Your Remote Purchasing Agent

Buying a car sight unseen used to mean hiring an agent to act as your representative. But with the PrivateAuto process, the local mechanic inspecting your vehicle essentially serves as your agent.

After you've located the right car and negotiated a price, you arrange for a trusted inspector in the area to thoroughly evaluate the vehicle on your behalf. Not only will they check under the hood and test drive the car, but they will also handle any paperwork and make sure the car gets shipped off to you.

With real-time progress updates, you'll have confidence knowing your inspector-agent is verifying the car's condition before you release funds.

Order Car Transport

If you don’t want to fly out and drive the car home yourself, just have it shipped. We’ve integrated shipping into our dealflow, eliminating the friction of coordinating transport between multiple parties. Welcome to easy, affordable vehicle transport for remote car purchases.

Our RunBuggy partnership gives you fast and affordable car shipping options within the PrivateAuto ecosystem.
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What Should I Ask a Seller When Buying a Car Long Distance?

When buying a car remotely, you shouldn’t worry too much about asking the “right questions,” as a vehicle history report and a good inspection should bring hidden issues to light.

Here are some basic questions you can ask if you feel inclined:

Why are you selling this car?
How long have you owned it?
Tell me about its maintenance history.
Who was the main driver of the vehicle, and what were their driving habits?
What sorts of driving conditions was the car mostly driven in?
When not being driven, where was the car parked?
Is the car under warranty? (Most used cars are not under warranty, but if this one is, that’s great news.)
Have any major modifications or repairs been made to it?
Do you have copies of your service records?
Does the car have a clean title? (If it has a branded or salvage title, you definitely want to know this before arranging an inspection.)

All of these questions—and any other communication—happen within our in-app messaging feature, so you'll never need to give out your contact info to a stranger.

What are the Pros and Cons of Buying a Car Out-of-State?

Buying a car from an out-of-state seller expands your options beyond just local inventory, but introduces logistical challenges.

Pros of an out-of-state car purchase:

1. Expanded selection.
2. Potential to find better a better deal.

Cons of an out-of-state car purchase:

1. Can't personally inspect the car before purchasing.
2. Hassle getting the car home.

We help you resolve the “cons” so you can enjoy the benefits of the “pros.”

How to Buy a Car Remotely with PrivateAuto?

Our transactional marketplace gives you the workflow and tools to handle all aspects of buying a car in another state. Here’s the step-by-step process:

1. Shop used vehicles for sale, make offers, and settle on the vehicle you want to buy.
2. Transfer funds from your regular bank account (checking or savings) to your PrivateAuto Pay account. If you need to apply for financing, you can do so right in the PrivateAuto app for competitive rates from our FDIC-approved lending partner. The lender will fund your PrivateAuto Pay account for you.
3. Get a car history report (included in the seller’s PrivateAuto listing if they’ve opted for Premium).
4. Arrange for a local inspector to act as your agent and schedule a meeting between the inspector and seller.
5. Arrange car shipping from the seller’s location to yours.
6. The inspector will perform a pre-purchase inspection and test drive the car on your behalf.
7. After the vehicle inspection turns up no issues, you and the seller each sign the bill of sale in the PrivateAuto app. You’ll get immediate confirmation that the seller has signed and that you are now safe to pay for the car since your counterparty is legally obligated to follow through.
8. Transfer funds to the seller instantaneously via PrivateAuto Pay (works any time of day, any day of the week). The seller will get immediate confirmation of funds received into their PrivateAuto Pay account.
9. The seller signs the vehicle title over to you and hands it over to the inspector, who will send it to you certified mail for you to sign.
10. The inspector ensures the car is loaded onto transport and shipped off to you.
11. You call your insurance company and get an auto insurance policy for the vehicle.
12. You receive your car and finish the title transfer at your state’s DMV or equivalent organization. At the same time, you’ll register it in your name, get new license plates, and pay sales tax (if applicable).
13. Enjoy your new-to-you car!

If you've already found the car you want to buy, our DealNow fast-track solution allows you to start a deal elsewhere (on another platform such as Autotrader, or with someone you met in real life) and finish it with PrivateAuto's transactional solution.
Close the Sale Anytime

How to Transfer the Title and Register an Out-of-State Car?

After buying the car, you'll need to finalize your ownership of it with your state's Department of Motor Vehicles (DMV) or equivalent organization.

The previous owner will have signed the title over to you when you purchased the car. Now you need to finalize the title transfer with your state. At the same time you do so, you will register the car in your name.

Here are some of the most commonly required documents that a state's DMV will require:

A completed vehicle title transfer and registration application form
Proof of auto insurance
Proof of identity (driver’s license or government-issued ID card)
Bill of sale—done through the PrivateAuto mobile app with e-signatures
The original title (or a duplicate title, if the original one had gotten lost)
An odometer disclosure statement—required by some states
A highway safety inspection—required by some states
Payment for your state’s car sales tax, if applicable

Paperwork requirements will vary from state to state, but you should expect to bring the following documents:

1. Valid driver's license
2. Proof of auto insurance
3. A bill of sale
4. Completed certificate of title
5. Emissions test certificates
6. A completed registration form

In most states, you will have 30 days to register the car.

While you are registering your vehicle, you will also apply for new license plates.

Looking to sell your car? Create a listing on PrivateAuto and connect with interested buyers today!

Buying a Car Out of State FAQ

What are the best transport services?

PrivateAuto has teamed up with RunBuggy to integrate car shipping services into our transactional marketplace. This partnership enables you to seamlessly arrange vehicle transport from within your PrivateAuto dealroom.

Once you've found your dream car and agreed to buy it, simply request a shipping quote. We'll connect you to RunBuggy's vast carrier network to ship vehicles anywhere in the continental US. Their team handles logistics while you track progress in your PrivateAuto dashboards.

RunBuggy offers open or enclosed shipping tailored to any car and budget. Rely on their licensed, insured drivers and door-to-door services to simplify your PrivateAuto experience. No need to coordinate transport separately—we wrap it into the transaction process.

Streamline your entire used car purchase journey with PrivateAuto's integrated shipping. We bring services together in one place so you can buy, sell, and transport vehicles with total ease.

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