Personal Insurance Blog

25-Jan-2013 Donna Bellavance auto

Out-of-State Auto Purchase Problems

Learn about out of state automobile purchase problems and cover your vehicle with auto insurance from andrew gordon incI’m not sure if it is the price that MA dealers are charging for the vehicles they sell, the sales tax imposed on the vehicles by the Dept. of Revenue (6.25% for new vehicles with listed dealer pricing or 6.25% of the book value determined by the DOR), or the impulse to buy while on vacation, but we have had quite a few out of state auto purchase transactions recently. Unfortunately, this process does not always go as smoothly as desired.

Temporary Plates in MA

When new plates are needed, many out of state dealers just assume they can provide temporary tags for the new vehicle. Unbeknownst to them, MA does not recognize these plates and will not provide insurance for vehicles with these attached. If they drive the vehicle back to MA, drivers can be stopped by the police for using these temporary plates.

The easiest way to process the transaction is to transfer existing MA plates to the newly purchased vehicle.  If so, as long as the dealership provides the required information, allows us to complete the Registry document, and forwards the original documentation, we can have our runner take to the Registry and the driver should be all set if processed within 7 days of the vehicle purchase.

We have recently learned that many out of state dealerships utilize outside firms that process registrations for many, if not all, other states. This may prove to be less cumbersome as long as all is processed in a timely fashion (7 days for transfers).  If not a transfer, wait until the new MA plates are issued before taking possession of the vehicle, unless the dealership will provide the plates with dealer tags and extend their own coverage until such time as the new MA plates have arrived.

MA Sales Tax

If the sales tax is collected for MA by the out of state dealership, it should be at the correct amount of 6.25% unless they are required to collect their own state rate & report to their Dept. of Revenue or Registry.  This should not be a problem if their rate is higher than MA—if less, the difference will still need to be paid to MA.

Trade-in Deduction Value

Lastly, if there is a vehicle traded in as part of the transaction, the trade-in value will be allowed as a deduction as long as the dealership is registered with MA. If not, the Registry will not allow the trade in value to be deducted from the purchase price when determining the sales tax to be collected.

Hope this information helps answer some of the questions you may have if it is your intent to possibly purchase a vehicle from an out-of-state dealer.

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