Why Would You Register Your Vehicle in Another State?

Vermont is a popular state for title and registration work.

Registering your car is a drag, no matter where you live. Every year, like clockwork, you get a notice from the DMV that you are due, and you better pay to stay on the right side of the law. Some states are worse than others, though. Some states are downright arduous. They cost hundreds of dollars per year and demand rigorous smog and safety checks every single year. What if there were a way to get around these rules? 

Depending on your situation, an out-of-state car registration could be just what you’re looking for. Whether you are trying to save money on high registration tax or get away from smog checks, we’ve got you covered. Let’s find out your options and why you should consider registering your car out-of-state.

What Does “Out-Of-State” Registration Mean?

As the name suggests, an out-of-state registration is simply a car registration from a state besides the one you live in. Sounds easy enough, except when it isn’t. There are a few reasons why this can be extraordinarily difficult, which is why our team here at Dirt Legal can do the heavy lifting for you. More on that later, though. 

Some states are more favorable than others for out-of-state titling and registration. They either have much lower than average taxes (Montana has no state sales tax), they are overly friendly to out-of-state registrants (Vermont openly states on the DMV website that you do not need to be a resident to title and register vehicles there), or they require no inspections (South Dakota has no annual inspection requirements).

Each of these states holds different thresholds of entry for their services. Montana requires you have a residence in the state (not a permanent domicile; there is a legal difference). Vermont has NO residency requirement at all. For Montana, an LLC is adequate to satisfy their requirement, so Montana LLC registration is a service we offer. 

What States Allow You to Register From Out of State?

It depends on what type of vehicle you’re planning on registering, but the most common states are:

• Arizona

• Montana

• South Dakota

• Vermont

Each state issues out-of-state registrations with varying degrees of ease, but they are all issued from a government office, so take that with a grain of salt. 

As we stated, Montana requires a residence sufficed by an LLC. Everyone knows this is going on, it’s not fooling anyone. Montana knows it, too. They are playing the game because they are making money off the deal and don’t deal with any congestion; the cars wearing their tags aren’t driving in Montana. 

The same with South Dakota. They know their 4% sales tax rate is highly favorable, so people have been registering vehicles in South Dakota for years to get out of places that charge 10%. 

South Dakota gets rich without increasing population density, saving tons of money on sales tax. It’s a win/win. 

Why Should You Consider This?

There are plenty of good reasons to consider an out-of-state vehicle registration. 

The past couple of years have taught us a few things, and the first should be that even though your life has gotten harder and more expensive, the state is sure going to take its pound of flesh. 

What do we mean?

Well, let’s look at it from your perspective. Used car prices are still outrageous, with some estimates of up to 30% over 2020 numbers. 

That used Sienna you would buy for $20k a few years back to haul the kiddos around? Yeah, it’s $26,000 now. And if your home state charges 10% sales tax, the tax burden went from $2,000 to $2,6000. The state did nothing but sit there and get to increase revenue by 30%. 

So what exactly are you, the middle-class consumer, supposed to do about this? Because the state is merciless. They may schmooze for campaign points, but behind closed doors, they are gobbling up revenue and will gladly keep taking more.

Inspections? What Inspections?

Backing off the numbers for a minute, let’s talk inspections. 

There is a difference in the types of vehicle inspections. An annual safety inspection is an inspection conducted ostensibly to ensure a vehicle's roadworthiness. These inspections include windshields and windows, lighting checks, brakes, and other vital systems. 

Now, most states require safety inspections when you bring in a vehicle from another state or after rebuilding it. Only some of the states require these on an annual basis for registration. Either way, why register in a state where inspections are required when you don’t have to?

Emissions? What Emissions?

The smog check is the big one. From year to year, as long as you take care of basic maintenance tasks, the safety inspection items rarely need attention. 

The same cannot be said of emissions checks. Smog checks are a wild card, especially once your vehicle is more than a few years old. Emissions equipment is subject to the harshest chemicals and gasses a vehicle makes and high heat.

At some time, your emissions gear has to be replaced. The catalytic converter will go out. So will your muffler. Not to mention O2 sensors, MAF sensors, PCV components, and so on, and so on. 

There are a lot of parts in the emissions system that will wear out, and when they do, you fail the test. And in all states with emissions testing standards, you don’t get to drive until you re-test and pass the smog check. 

In California, not only can you not drive it, you can’t sell it either without a passing smog check. That’s right, friends, no passing smog check, no offloading of a bunk car. Why deal with that?

Could Registering Your Car Out of State Save You Money?

Not only can registering out-of-state save you money, but it can also save you enormous headaches. As we said, California, the largest state, doesn’t even allow you to ditch a headache car without passing an emissions test. You can’t put a price on that peace of mind. Registering your car out-of-state buys you just that. 

Our best money saver is the Montana LLC Registration Program, especially if you have a higher ticket vehicle (or if you have a truck and travel trailer, two high ticket items). You can put as many vehicles in the LLC as you want, so a truck and travel trailer is no problem. Since the combined total of these can easily exceed $200,000, you can stand to save up to $20,000 in sales tax. That’s not chump change. 

You can always go with a South Dakota registration if the Montana LLC is too rich for your blood. It still drops the total tax burden to 4%, returning serious savings in many cases. But the major win is no more emissions checks. Ever. 

Wrapping Up

Registering your vehicle sucks. But here at Dirt Legal, we help it suck less. We offer solutions to save you money, time, and headaches.

• Our Montana LLC Registration Program allows you to register your vehicles in sales-tax-free Montana, and you may very well have no inspections and emissions requirements, no matter where you live. 

• If you are having a hard time registering your car because of a missing title, you might find a transferable registration through Vermont is what you need.

• An out-of-state car registration is also a great way to save some money on taxes and eliminate inspections and smog checks.

Whatever your situation calls for, registering your car out of state is something you’re well within your rights to do. Check your local laws and see what’s possible where you live and consider your options. The next time you think about an inspection, smog test, or taxes on your car, it might be to realize you never have to do it again.