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Save on Your Next Car Purchase by Buying Out of State

Buying a car is a big financial decision, and it shouldn’t be taken lightly. With so many options, it can be tough to know where to start. For many people, buying a car starts with finding a suitable model and then negotiating the best price. However, there’s another way to save money on your next car purchase, and that’s by buying out of state. When it comes to buying a used car, one question is whether it is possible to avoid paying sales tax. This article will explore why purchasing your next vehicle out of state may save you hundreds or even thousands of dollars on the purchase price. Here’s what you need to know.

Introduction: Save on Your Next Car Purchase by Buying Out of State

Ever thought about moving? What state would you want to live in? The closer to work, the more traffic? Would you choose a big city or a more peaceful place? All these things and more should be considered when selecting a new residence. In this article, I will talk about why buying your next car out of state may save you hundreds or even thousands of dollars on the purchase price.

Car Purchase

Is it Possible Not to Pay Any Sales Tax on Used Cars?

Is it possible not to pay sales tax when purchasing a used car? This question gets asked quite frequently. Technically speaking, it is tax-free when exchanged in your state of residence ( Source ). But don’t forget about this one: Generally, if the used car you are buying was previously taxed in another state and fully reported as a capital asset on the seller’s property tax statement or town tax rolls, you won’t have to pay sales tax.

Calculating Sales Tax for a New Car Purchase

Calculate the amount of sales tax due when buying a new car. When you buy a vehicle, the purchase price includes only your cost for the vehicle and does not include taxes. These taxes must be paid at the time of sale. If you selvehicle car to purchase another one, do not report a taxable event on your income tax return. It’s like creating an invisible salary payment when no official paycheck is attached to it.

How to Avoid Paying Taxes on a New Car Purchase

When you buy a car, the state of purchase doesn’t matter for income tax purposes. All forms follow a ” residency tax.” The higher your sales price in a given state, the more favorable the odds that you’ll be taxed in a lower-tax state and not the buyer’s state of residence. Lifestyle and Real Estate Consultants Tom Anderson explains how using an online tool called Tax Hub makes the process easy.

The Benefits of Buying a Car Out of State

The internet has made buying a car relatively easy. But it is also more convenient to buy that car in your home state. The average out-of-state purchase can save an auto buyer $1,400, making it easier to afford a new ride. Auto loans made in the state where you live will also offer lower interest rates. And buying from a friend or family member can save you thousands of dollars. However, people who purchase cars outside their home state often have to pay for an extra step when buying a car: shipping the vehicle. The cost of shipping a vehicle is typically a large part of the total price.

Things You Should Keep In Your Mind:

  • How much does it cost to ship a car?
  • How do I send a car?
  • What is the best way to ship a vehicle?
  • How do I find a reputable car shipping company?
  • What are the risks of shipping a vehicle?
  • How can I save money on shipping a vehicle?

The Drawbacks of Buying a Car Out of State

Cars are a prime purchase for many people due to their high value, price tag, and the level of choice consumers have. When purchasing one out of state, you may notice costs increase due to taxation occurring at different points during the process. Shop around and ensure you get the best deal when buying your next car out of state.

How to Calculate Sales Tax for a New Car Purchase

When you buy a car, it can be anywhere from $3,000-$10,000. There are two ways you can do this: Register for in-state tax or register for out-of-state tax. For the purpose of this story, we will assume the buyer registered for an in-state tax rate and got their car for around $10,000. According to TurboTax, on a purchase price of $10,000, $5,431 would be in-state sales tax.

The Pros and Cons of Buying a Car Out of State

This can be a huge pain and take days, but it’s possible to find excellent deals by visiting different locations across the US. You will save money on your car purchase, but this can also help you qualify for credit cards that offer cashback while financing a car out of state. Some car dealers will offer back cash leases, where you can sponsor a new car and pay for it in monthly payments over time. This gives you an interest-free loan for the total purchase price of the vehicle and typically offers lower monthly payments than a loan financed with cash. Depending on the terms of your lease, you could save thousands of dollars in interest over the life of the lease.


If you’re thinking about buying a car out of state, you should keep a few things in mind. First, you’ll need to ensure that the vehicle is correctly registered in your state. You’ll also need to be prepared to pay any applicable taxes and fees. Finally, you should be aware of the laws in your state regarding out-of-state car purchases.

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