Buying a car out of state can be a great way to save money or access a broader selection of vehicles. However, not all states are created equal when it comes to taxes, fees, and ease of purchase. Here’s a comprehensive guide to the best and worst states to buy a car, along with a ranking to help you make the smartest choice.
Best States to Buy a Car
1. Oregon: Big Savings Without Sales Tax
Oregon consistently ranks as the best state for car buyers because it doesn’t charge sales tax. For instance, buying a $30,000 car here can save you around $2,400 compared to California, where sales tax averages 8%.
Why It’s Great:
- Tax-free purchases mean huge savings upfront.
- Non-residents can take advantage of Oregon’s tax-free status, though taxes may still apply when registering the car in your home state.
Things to Watch:
While registration fees are slightly higher than average ($248 for fuel-efficient vehicles), the savings on sales tax far outweigh this cost.
2. New Hampshire: Tax-Free and Affordable
New Hampshire is another tax-free state, but it also keeps registration and related fees minimal. If you’re looking for a no-fuss purchase, New Hampshire offers one of the most straightforward processes.
Why It’s Great:
- No sales tax, just like Oregon.
- Affordable registration costs and no emissions testing requirements simplify the process.
3. California: A Surprising Contender for EVs and Luxury Cars
While California is known for high taxes, it shines for specific buyers. If you’re shopping for an electric or hybrid car, California offers some of the best rebates and incentives in the country, like the Clean Vehicle Rebate Program, which provides up to $7,500 in savings.
Why It’s Great:
- Extensive inventory ensures you can find almost any vehicle.
- Strong consumer protections, like the California Lemon Law, give you peace of mind.
Things to Watch:
High sales tax (7.25%–10.75%) and strict emissions standards can make the process more expensive and complicated for out-of-state buyers.
Worst States to Buy a Car
1. Nevada
Nevada’s combination of high sales tax and mandatory emissions testing makes it one of the worst states for out-of-state buyers.
Why It’s a Challenge:
- Sales tax averages 8.25%, significantly adding to the cost.
- Extra fees for smog checks and out-of-state title transfers add unnecessary expenses.
2. Hawaii
Hawaii is an expensive state to buy a car due to limited inventory and the high cost of shipping vehicles to the mainland.
Why It’s a Challenge:
- Cars in Hawaii are priced higher due to limited competition.
- If you plan to take your car home, shipping costs can exceed $1,000.
3. New York
New York’s additional taxes and complex registration requirements make it a less-than-ideal state for out-of-state buyers.
Why It’s a Challenge:
- Vehicle use tax adds extra costs to purchases.
- Registering an out-of-state car often requires inspections, causing delays.
Step-by-Step Guide to Buying Out of State
- Research Pricing and Taxes
Compare prices in multiple states and check your home state’s tax rules for vehicle registration. - Check Vehicle History
Use tools like Carfax to ensure the car has no major issues. - Arrange a Pre-Purchase Inspection
Hire a local mechanic in the purchase state to inspect the vehicle before finalizing the deal. - Plan Transportation
Decide whether to drive the car home yourself or arrange for professional shipping. - Prepare Paperwork
Make sure you have the title, bill of sale, and any other required documents to complete the registration in your home state. - Register the Car in Your Home State
Visit your DMV to pay taxes, transfer the title, and register the vehicle.
Final Ranking of States for Car Buying
Best States
- Oregon: The gold standard for tax-free savings.
- New Hampshire: Minimal fees and a simple process.
- California: Best for EVs and luxury cars with robust incentives.
Worst States
- Nevada: High taxes and unnecessary fees.
- Hawaii: Limited inventory and high shipping costs.
- New York: Extra taxes and complicated registration requirements.
Final Thoughts
Buying a car out of state can save you money and open up more options, but it requires careful planning. States like Oregon and New Hampshire offer unbeatable tax-free deals, while California shines for specific incentives. On the flip side, states like Nevada, Hawaii, and New York pose extra costs and hurdles that could make the process more expensive than it’s worth.
With this guide, you’ll be ready to find the best deal, avoid unnecessary fees, and drive home in your dream car without breaking the bank!
