How to Buy an Out-of-State Car in Delaware

Due to the low sales tax on vehicle purchases, Delaware is a popular place to purchase a car, even if you do not live in the state. If you are buying a car in Delaware as an out-of-state buyer, you will still end up having to pay the full sales tax amount for your state. While you'll only be charged Delaware sales tax when you buy the car, your state will collect the difference when you register the vehicle.

Instructions

1

Visit a car dealership in Delaware or an individual seller that has a car you want to buy. In Dover, you will find the largest concentration of car dealerships. Some you can find include Price Acura, Hertrich's Capitol Lincoln Mercury and Dover Volkswagen. Test-drive the vehicle you are interested in before making your decision.

2

Use the NADA Guides or Kelley Blue Book website (see Resources) to check the value of the car. Once you know the value, you can negotiate the price so that you do not end up paying too much for the vehicle. Even though you live out of state, you need to enter in the local Delaware ZIP code to get an accurate value amount for the local area. Otherwise, you may end up paying too much for the vehicle.

3

Secure financing, if you have not already done so and do not have the cash. Financing can be done through a local bank of your choice or directly through the car dealership if you are at one. Some banks with branches in Delaware include Wilmington Trust Bank, First Shore Federal Savings & Loan and Wachovia. Ask to fill out the financing application and wait for the decision, which typically takes between 10 and 30 minutes. The financing application needs details about your income.

4

Sign the purchasing documents once you have agreed on a price and have financing. If buying from an individual, complete a bill of sale and the title transfer with the seller. Delaware requires individual sellers to also complete a "seller's report of sale," but you do not have to sign it. If buying from a car lot, you will be presented with paperwork, including the purchasing contract, bill of sale and financing contract. Purchasing documents in Delaware are similar to those in any other state. Before signing, review the documents to make sure you are not being charged for registering the vehicle in Delaware, since it must be registered in your home state.

5

Take your bill of sale or purchasing contract to your local department of motor vehicles when you get back to your home state. Depending on your state, you may need other documents such as a smog certificate. The document will show that you paid sales in Delaware of just 3.75 percent. As a result, the DMV will require that you pay the equivalent sales tax amount in your state to when you register the vehicle in your state. This means if your state sales tax is 8.75 percent, you must pay the difference of 5 percent when you register the car.