If you’ve bought a car from a dealership they will likely collect sales tax and pass it along to the proper agency in your state. You might have to pay the difference if that state’s sales tax is lower than yours, however. You may also have to pay any applicable local sales taxes. Once you've paid your dealership fees, DMV fees, and all related car taxes, it's time to purchase car insurance or meet your state's financial responsibility laws. Not all owners take this cost into consideration—and depending on your state, it can significantly increase the total amount you pay for your vehicle. For example, older model used vehicles might require only the state's minimum liability coverage; on the flip side, new cars might need both liability insurance and comprehensive Yes, you must pay sales tax when you buy a used car if you live in a state that has sales tax. However, you do not pay that tax to the individual selling the car. You will pay it to your state’s DMV when you register the vehicle. The state where you register the car is the one that charges the sales tax, not the state where you bought the car. So, if you live in Massachusetts (a state that has sales tax) but buy a car in New Hampshire (a state with no sales tax), you will still have to pay