Red Tape Comes With Car Dealers’ Out-of-State Sales

Out-of-state vehicle purchases are big business today, given the rise of shopping websites that let Cousin Bubba in Alabama buy from a dealership in Idaho.

Some estimate this volume at 10% to 20% of all transactions for franchised and independent dealers.

For dealership F&I managers, figuring out each state Department of Motor Vehicles’ specific and often unique titling and registration requirements can be a daunting task.

Out-of-state filings must be accurate and complete or the affected DMV will return the paperwork. Also necessary: paying precise fees and taxes.

Getting all that right the first time can frustrate dealership F&I departments and titling clerks. Getting it wrong can cause red-tape headaches and delay out-of-state buyers from taking delivery of their vehicle purchases.

Figuring out various states’ vehicle registration and titling fees, taxes and other requirements burns time and frustrates everyone involved.

Carfax notes: “Unfortunately, cars that are registered in one state, purchased by a buyer who lives in another state and then registered in the owner’s state may not automatically be accepted by the receiving state.”

Dealers must follow certain official procedures before a DMV will issue a registration and tags and allow a title transfer. In some states, there are extra steps.

Several companies have products to simplify the process.

For instance, DealerDoc uses zip codes to pull necessary data from buyer states’ DMVs to obtain taxes and fees for quick bank approvals. The system migrates vital information to required documents and provides checklists to ensure accurate DMV filings.

“The most frustrating and inaccurate part of out-of-state transactions traditionally has been learning about and calculating the various fees, taxes and other charges required by the buyer’s state DMV,” says Ken Roberts, DealerDoc’s founder and CEO.

Out-of-state titling and registation fees and taxes can be costly and affect how a car deal is financed.

“Taxes and fees differ by state, and the fees alone can be north of $800, so they weigh heavily on how the dealer gets approved to work the deal,” Roberts says.