Can you finance a car from another state

Can you finance a car from another state? Yes, you can. If you want to save money or want a classic model that is not available in your state then you can finance a car from another state. The process might be complicated for you, tax terms, registration fee, and emissions are the thing that you must consider before financing a car from another state.

Financing a car from another state:

A car is something that everyone needs. If you have an eye on a model with unique features not available in your state or want to save money and know that this model is at off prices in another state, it urges you to go and purchase.

However, you must know the rules and regulations of the state. Every state has its own rules; each has its tex term, registration fees, and emission.

What are the things that need to be considered before buying a car from another state?

Financing a car from another state is not an easy process. It might seem easy, but you must consider a lot of things. You also need good homework about every step.

Tax rates:

You have to pay tax; you cannot get rid of it. Each state has a different tax, such as the New hemisphere and Montana has no tax; on the other hand, some other states have a large amount of city tax. It depends from state to state.

Before buying a car in another state, take information about taxes and other charges to avoid additional payoff.

For example, you live in Ohio and want to buy a car from Pennsylvania. Ohio has a 5% tax, while Pennsylvania has a 6% tax.

The car you are buying is worth $20,000 if we calculate tax in both states:

Ohio, $20,000 x 5% = $1000,

Pennsylvania, $20,000 x 6% = $1200.

It costs more if you buy a car of the same rate in Pennsylvania rather than Ohio.

Cost difference:

The buyer only moves to another state if he finds cheap rates. So, are you planning to buy a car from another state? If yes, then make sure to survey rates, see what local states offer, and what rates you get in different states. If there is a visible difference, see tax terms and other costs. The final cost should be less than your local state; otherwise, it is not beneficial to finance a car from another state.

Emmison requirements:

Every state has its emission criteria called smog laws. Under this law, they check whether this vehicle is according to the persistent pollution level. Every vehicle doesn’t pass this test.

Before purchasing a vehicle, make sure that it fulfills the emission requirements. Sometimes motorists need to submit emission reports to check the emission level to the mechanics.

Here is some example of emission requirements for a vehicle in different states.

Alabama None
Alaska None
Arizona vehicle emission
Arkansas None
California Smog Information
Colorado General Emissions Inspection Requirements and Information
Connecticut Connecticut Emissions Program
Delaware Vehicle Services: Exhaust Emission Inspection
District of Columbia D.C. DMV Exhaust Emissions Testing
Florida None
Georgia Georgia Vehicle Emissions Inspection and Maintenance Program
Hawaii None
Idaho Idaho Vehicle Emissions Testing
Illinois Vehicle Emissions Testing Program
Indiana Vehicle Emissions Testing Program
Iowa None
Kansas None
Kentucky None
Louisiana Motor Vehicle Inspection and Maintenance Program
Maine Enhanced Vehicle Inspection and Maintenance
Maryland Vehicle Emissions Inspection Program
Massachusetts Massachusetts Vehicle Check
Michigan None
Minnesota None
Mississippi None
Missouri Gateway Vehicle Inspection Program (St. Louis metro area)
Montana None
Nebraska None
Nevada Nevada Emissions Control Program
New Hampshire Inspections and Emissions
New Jersey Understanding Inspections and the Emissions Test
New Mexico Emission Testing
New York New York State Vehicle Safety/Emissions Inspection Program
North Carolina Vehicle Emissions and Safety Inspection
North Dakota None
Ohio Ohio E-Check Program
Oklahoma None
Oregon Department of Environmental Quality Emissions Testing
Pennsylvania Emissions Inspection Program
Rhode Island Emissions and Safety Testing
South Carolina None
South Dakota None
Tennessee Emissions Testing Information and Station Schedules
Texas Vehicle Inspection
Utah Emission Inspections
Vermont Vehicle Emission Control Requirements
Virginia Emissions Inspections
Washington Washington State Vehicle Emission Check Program
West Virginia None
Wisconsin Emission Test
Wyoming None

Vehicle history report:

A vehicle history report is mandatory before purchasing a used car; make sure to take a vehicle history report from the dealer or private owner. You must know about the car’s owner, its accident history, how many times it was noticed by the police, its service history, and the place of services like the garage or company.

If you have all this in one report, it would be easy for you to decide whether you want this car or not.

The authenticity of the car seller:

When you are moving to another state to buy a new car or secondhand car, you must be aware of the authenticity of the car seller.

These are some pieces of advice that you can follow before picking a seller in your mind.

Advice for buyers:

  • Before buying a vehicle, make sure to inspect it in person. If you can’t go physically, then request your friend and family member to go on behalf of you for a car inspection.
  • Most of the time, you can’t grab or detect problems in the vehicle. To get rid of this go-to mechanic and ask to check the car. You can take time from the dealer; you can check by yourself within this time.
  • Never open your ears over more than suitable ads. For example, a car selling ad that offers a meager cost. Must check the market price of the vehicle.
  • It is better to pay in person, especially if you buy a car from another state.
  • If you find any scam or fraud, call the police or auto fraud complaint center to stop scammer fraud by other people.

Insurance coverage:

In the U.S., You cannot drive a car without insurance. Before buying a car, make sure you set your appointment with any reliable insurance company and select the best deal. If you intend to buy a car and drive back to your home state, you must take insurance coverage for this from the state where you bought your car.

If you are shipping your car through sea cargo, air cargo, or land cargo, you might not need insurance for your car, but before choosing any shipping company, you must revive their insurance coverage for the vehicle. That’s how you get relax about your car.

Transportation arrangement:

If you bought a car from another state and plan to ship it, you must do a transportation arrangement. As discussed above, they are vehicle shipping companies that transport your vehicle safely.

How to transport a car to another state?

Different companies provide auto transportation services to their customers. You just need an online survey and find rates and availability.

Before choosing an auto transportation company, make sure you know these things.

  1. The organization must be licensed and insured for an interstate move. You can easily verify it from the website of (The federal motor carrier safety administration). You can check this through the company’s DOT number. If the number is present, it is verified and screened for license and insurance.
  2. Company reviews are the key to judging the quality of services. Good reviews mean good services.
  3. A good auto transport company has a good Better Business Bureau (BBB) rating.

Considering the above three points, you can consider a good auto transport company for your luxury and classic car.

What are the factors that affect the cost of transporting a vehicle?

The number of factors that can affect the cost of transporting your car. However, the average transporting cost for a four-door car is $600-$1000, and for small vans, pickups and SUVs is around $800-$1075.

Here we see these cost-affecting factors of the auto transport companies.

  1. A car’s size and weight: Big and heavy automobiles cost more than minor and lightweight vehicles.
  2. Distance of your move: If you are living far away, then you must pay more because of fuel charges, labor charges, and tolls.
  3. Model and type of the car: If you are transporting a luxurious or ancient classic model that requires special attention and care, auto transportation will charge more for this.
  4. The spell of the year: auto transportation cost also depends on the time of the year in which you want to transport your car. Mostly summer is when the company charges high prices because of the rising demand for it. In winter, charges are a bit low.
  5. Type of transport: charges vary if you choose between open-air transport and close air transport. Open-air transport charges are less than close air transport service.
Why does the cost vary between open-air and close air auto transport?

Both open and close auto transport can be done through a truck; however, an auto shipping company is the best option if you are going a long way and can’t drive your car. Now we see the difference between open-air and close air auto transport services.

Difference between open-air and closed air auto transport services:
Open-air transport service Closed air transport service
Open-air auto transport is faster than closed air auto transport service Closed air transport gives extra security to your vintage car.
Through open-air Auto Transport Service, you can carry a number of cars at the same time that’s why it is considered cheap. Closed air auto transportation service is expensive as it transports few cars at one time.
As all the vehicles are open-air, they can easily be affected by climatic disturbance.
It is fully loaded with cars so, can take a long time to cover the distance.


Auto transportation is of two types, open-air and closed-air. Both can transport your car safely, but if you want extra care for your vintage car, you can go for closed-air auto transportation.

What is a reciprocal state?

If a person buys a car from another state, he must be liable to pay tax in sales tax. If the state is reciprocal, the dealer pays the tax money back to the state where he lives. But there is a condition that both states should be reciprocal.

For example, Alex buys a car from Pennsylvania and lives in Ohio. Pennsylvania is a reciprocal state, so the amount he paid in terms of tax, as a result, to buy a car from there, goes back to Ohio.

It is a reciprocal state, and that’s how you can give an advantage to your home state.

Where do I pay sales tax if I buy a car in another state?

Although tax is something you have to pay, either you buy a car from your home state or a different state. Before buying a car, make sure that you know all do’s and don’ts, including tax, registration fee, insurance, etc.

Buying a car from another state is a tedious process. However, if you find cheap rates or a model not available in your state, you must move to another state to get your dream car.

Before purchasing a car, know the following steps to avoid penalties. Before purchasing a car, know the following steps to avoid penalties and tax evasion.

  1. You should have a vehicle history report if you buy a secondhand vehicle.
  2. Must inspect before paying for the amount
  3. Make sure you know the tax terms of the state where you are planning to buy a car.
  4. To drive legally, you must register your car. Car registration is required in your resident state, but you need to register your vehicle temporarily if you drive back to your state.
  5. In the U.S., you can’t drive without insurance. Arrange insurance coverage even if you drive your car back to your home state.

Do I have to pay taxes twice if I purchase a car out of the state?

You pay sales tax where you register your car. You don’t need to pay tax twice.

How to avoid sales tax when buying a car out of the state?

To avoid sales tax, you need to buy a car from the state with no sales tax. For example, Alaska, Montana, Delaware, etc. if you purchase a car from these states, you would probably don’t pay any sales tax.

Summary: The reciprocal state is a state that reverses sales tax in the home state but the condition is both states should be reciprocal. No sales tax state is a good option if you are searching low-cost deal on the vehicle.


Following are the frequently asked questions regarding “Can you finance a car from another state.”

1. How to register a finance car from another state?

If your vehicle is your name, it would be easy for you to move the car from one state to another, but it might be tricky if you don’t have it.

Ask your lender to send you a DMV of nearer, then go there and apply for registration. You have to pay a minor fee for the temporary registration of your car.

2. What steps should I take before moving the car out of the states?

Following are the steps that should take:

  1. Get a new license
  2. Register in your new state
  3. Return your plates
  4. Update your insurance policy
  5. Update the DMV
  6. Update your lender
  7. Register to vote

3. What documents are required for the ownership transfer of a car?

To complete the vehicle registration, the buyer must present the following documents.

  • Two copies of Form 29
  • Notice of ownership transfer
  • Original R.C.
  • Copy of valid car insurance policy
  • Copy of PUC
  • Address proof
  • Copy of PAN card
  • Original Clarence Certificate
  • One copy of passport size photograph

4. How to transfer a car title in the USA?

The seller signed a title to release its ownership. The buyer receives a signing title to the DMV, after which the state issues title and registration to the buyer.

5. What is the cost of car registration in the USA?

In the USA, car registration costs are between $8 to $225. This cost is fixed in 45 states of America. However, the range can be exceptional.

6. What is the car title transfer cost in the USA?

The car title transfer cost would be around $3 to $100 in 45 United States of America.

7. What is the average sales tax on vehicles in the USA?

In the United States, the average sales tax rate on vehicles is around 4.87%. California is one of the most expensive states regarding vehicle sales tax rates, around 7.25% plus local tax.

8. If I buy a $20,000 car, how much sales tax do I have to pay?

Let’s suppose you live in a state where tax is 4.87%. If you buy a car worth $20,000, your sales tax is 20,000 times 4.87%.

$20,000 x 4.87% = $974

You have to pay $974 tax over 20,000 worth of car purchases.

9. How to avoid sales tax on used cars?

Some states have no tax, such as Alaska, Montana, Delaware, Oregon, and the new hemisphere; you can take advantage of purchasing a car from these states.

10. How can I avoid sales tax on used cars in California?

Following are the tips to avoid sales tax in California.

  • Keep a record of your mileage
  • With a trade-in at purchase; you can save use car tax.
  • Keep your car tuned up
  • Keep receipt and records of the vehicle.
  • Keep an eye on the update of California tax laws.

11. Is it cheaper to buy a car from another state?

Yes, it can be. It is one of the main reasons buyers attract some other states to purchase a car.

12. What are the states that should be avoided purchasing the car?

  • Arizona: $2297, 13.9% of the average sales price.
  • Colorado: $2284, 13.8% of the average sales price.
  • Tennessee: $2061, 12.5% of the average sales price.
  • Florida: $1869, 11.3% of the average sales price.

13. Which is the cheapest state to purchase the car?

Because of the low registration fee and no sales tax, the New hemisphere is considered the cheapest state to buy a car. Florida is second; you can experience 10% less than the average cost.

14. How much does it cost to buy a car in the USA?

You can easily buy the car in cash and installments in the united states. In 2021, the average car cost in the united states was $42,258, and the monthly installment is $563.

15. What is the best website to buy a car in the USA?

On top, Auto Traders are considered one of the best websites to purchase and sell used cars. It is an authentic website that most people visit if they intend to buy a car.

16. How do I know if my car needs an emissions test in Illinois?

Motorists can call 800-635-2380 or go to the Vehicle Eligibility Check Tool. They will need to provide their license plate or VIN to check


To conclude the above topic name “Can you finance a car from another state.” Car is every once need. If you want to purchase a car, search around and see where you can get better rates. For this reason, you can finance a car from another state. The procedure might be lengthy or complex but saving money is people’s priority. Another reason for financing a car from another state is if you want to purchase a classic model that is not available in your state.

Few things that you should check before making a decision.

  1. Tax rates
  2. Registration fee
  3. Emission law
  4. Insurance policy

After going through all these checklists, decide which state is better to purchase a new and used vehicle.

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