The Codified Law of South Dakota Title 32 is the statute governing all related vehicle transactions in the state. Under the law, the Department of Revenue (DOR) oversees these transactions.
The DOR is mandated to collect taxes and fees on all registrations, titling, and renewals. In connection with these fees and transactions, this government agency creates efficient systems to regulate the buying and selling of vehicles in South Dakota.
The DOR also identifies specific documentation and processes that buyers and sellers must adhere to to avoid legal complications in every transaction. It enumerates the different penalties individuals may incur when failure to comply occurs.
Understanding these processes and legal requirements is a must before individuals, whether residents, foreigners, or non-residents, plan to purchase a vehicle in South Dakota.
What Is the Process for Buying a Car in South Dakota?
Buying a vehicle might be an overwhelming experience for first-time buyers because of the different documents and processes required to complete the transaction. However, it could also be rewarding once the transaction is complete.
Buying a Vehicle from a Private Seller
To avoid any legal implications, buyers must follow the prescribed documents and process to register the vehicle after purchase from a private seller. Here are several steps that a buyer must take to make a successful purchase.
Verify the Legitimacy of a Title
Before purchasing a vehicle from a private seller, buyers must request and inspect a physical copy of the title from the seller. All vehicles have titles, even older models. Bonded titles are also being issued to vehicles 30 years and older.
Buyers should note that South Dakota has an ELT system, which stands for Electronic Lien and Title System. This system allows lenders to choose an accredited provider that will notify the DOR and lienholder of all transactions related to vehicles with liens. However, participation is not mandatory.
Furthermore, when a lender participates in the ELT system, a vehicle with liens doesn't have a printed title until all liens are perfected or satisfied. Thus, buyers must check if the vehicle title has a lien notation. If it does, they should request proof or a document, releasing the seller from all liens.
In cases where the seller can't provide a physical copy, a buyer's next move is to ask for the VIN/HIN (vehicle identification number/hull identification number) and proceed to VIN/HIN validation and confirmation of a lien.
Validate VIN/HIN
Buyers can validate the information on a vehicle title and registration through the VIN checker tool online. However, note that due to the Privacy Act, the information could refer to generic ones and be limited.
If buyers want to know more about a vehicle, they may need to request information from DOR. They must fill out a DPPA: private individual vehicle information request form. Moreover, attachment to this form includes a bill of sale or a written affidavit granting permission to the requester.
Obtain a Vehicle History Report
Buyers can obtain a vehicle history report from the seller or an approved provider for precautionary measures. South Dakota participates in NMVTIS (National Motor Vehicle Title Information System), a system where information about vehicles converges.
Through accredited providers, individuals can obtain pertinent information about a vehicle since all data entered into the system are never altered or erased.
This report provides potential new vehicle owners with an extensive overview of a vehicle, especially a used one. Buyers should compare the vehicle history report the seller gave and the report they obtained.
Any discrepancy must be dealt with appropriately to avoid any legal implications in the future. Thus, buyers must initiate clarifications if they see something amiss between the reports generated.
Service fees may apply depending on the provider for generating reports. Buyers should contact their local treasurer's office or visit the official website of NMVTIS for more details.
Request Seller's Permit
The seller's permit gives the buyer temporary privileges to drive the vehicle during the waiting period. It is valid for 45 days. A seller must generate this permit and give it to the buyer.
Within this period, the seller must deliver or mail the title properly endorsed with the buyer's complete information.
Inspect Title Copy for Transfer of Ownership
Once the buyer receives the title copy, they must check the correctness and completeness of the ownership transfers. The seller's signature and name must be present. Buyers should verify the information with the seller's driver's license, and the details should be the same.
Aside from this extra precaution, buyers must compare the VIN in the title and the VIN in the vehicle. The number must be the same. Buyers can find this identification number on the dashboard near the windshield or the driver's side door frame.
If a lien is involved, a release document must accompany the title. A new notation must be included if buyers assume an existing loan balance or get a loan for the vehicle.
To note a lien on an existing South Dakota title, the owner or lienholder must present the original or a valid duplicate certificate of title and a copy of the security agreement to the county treasurer's office in the titled owner's county. A lien notation fee applies.
Scrutinize the Bill of Sale and Other Documents
Buyers can complete a vehicle purchase on their preferred bank. Thus, they must inspect the bill of sale and odometer disclosure statement before completing payment. The information reflected on it must include the name, address, and signature of both parties.
There must be no erasures or tampered information. Most importantly, the VIN on the title and the vehicle must be the same as on the bill of sale. The title number must also match the bill of sale, odometer disclosure, and the vehicle title.
Secure Automobile and Liability Insurance
Automobile insurance is mandatory when buyers register their newly acquired vehicle. Proof of coverage or financial responsibility is one requirement for vehicle registration. Therefore, secure insurance before going to the county treasurer's office.
Register a Vehicle and Apply for a License Plate
Once buyers have all the necessary documents, they can register their newly acquired vehicle and apply for a license plate if they don't have one.
To register a vehicle, applicants need a properly accomplished registration form, a bill of sale, an odometer disclosure, and a title. They also need a valid driver's license and proof of residency. New registrations require in-person visits to the county's office.
If the validity of the seller's permit is not enough to complete all transactions related to buying a vehicle, buyers can apply for a temporary permit. The maximum period is 15 days, and this permit is available at the county's offices. Note that this permit is only available once a year for every motor vehicle.
During this period, new owners must carry the bill of sale or title properly endorsed in their name when moving or driving the vehicle. They may also request a transfer of their license plate if they already have one.
Owners who don't have existing plates may obtain a plate-ordered permit while waiting for their new license plate. This permit is valid for 30 days or until the new plate arrives at the new owner's designated address.
Buying from a Vehicle Dealership
Purchasing a vehicle from a dealership in South Dakota offers a streamlined process. Dealers typically handle all necessary paperwork, from title transfers to temporary registrations.
Moreover, dealership prices are often negotiable. Buyers must research the vehicle's fair market value beforehand to strengthen their position during negotiations. Dealers also offer financing options, allowing buyers to spread payments over time. To ensure a smooth transaction, buyers should consider the following:
Verify Dealer License
Verifying a dealer's license confirms their legal authority to sell vehicles and protects buyers from fraud. In South Dakota, the DOR oversees auto dealer licensing. Buyers can request to see the dealer's license and contact the DOR for verification. Dealers must legally display their license in their showroom, providing an immediate visual confirmation of legitimacy.
Moreover, South Dakota publishes an updated list of active dealers online. This list is updated daily so buyers can check it out before proceeding with their purchase.
Buyer's Guide
The Federal Trade Commission (FTC) mandates that dealers display a Buyer's Guide on used vehicles for sale. This guide provides essential information about the vehicle, including warranty coverage and whether the vehicle is sold "as-is."
There are some exceptions to this buyer's guide. Vehicles weighing more than 8500 GVWR (gross vehicle weight rating), motorcycles, trailers, off-road vehicles, farm equipment, and cars sold as scrap are exempted from including a Buyer's Guide.
Understand Warranties
Reviewing the Buyer's Guide is crucial to understanding the type of warranty, if any, that comes with the vehicle. An "as-is" sale means the buyer assumes responsibility for any issues after purchase.
Vehicles may still be covered under an unexpired manufacturer's warranty, which is valid for a specific mileage or time period. Buyers should verify this with the manufacturer. Some dealers also offer limited or full warranties that cover specific repairs for a defined period or mileage. It's essential to scrutinize the terms of these warranties.
Additionally, dealers might offer service contracts or "extended warranties" from third-party providers, which cover repair costs as specified in the contract. These contracts are typically sold at the time of purchase and can provide additional peace of mind.
Check for Available Financing
Dealerships offer various financing options, making it easier for buyers to manage their payments. However, it's important to understand the interest rates, loan terms, and total costs involved. Comparing dealership financing with loans from banks or credit unions can help secure better terms.
How Does the South Dakota Lemon Law Work?
The South Dakota Lemon Law provides protection for consumers who buy new vehicles that turn out to be defective.
A vehicle is considered a lemon if the defect significantly impairs its use, market value, or safety. Second, the authorized dealer or manufacturer must be unable to repair the vehicle's defect after numerous attempts.
Typically, this second criterion means that the same defect has been subject to repair four or more times without success. Moreover, the vehicle has been out of service for 30 or more cumulative calendar days due to repairs.
To be eligible under the South Dakota Lemon Law, the following conditions must be met:
- The vehicle must be new when purchased.
- The first repair must be reported within the warranty period or within one year of the vehicle's original delivery date, whichever comes first.
- The consumer must write the manufacturer about the vehicle's defect.
What Are the Steps To Take?
If consumers believe their vehicle is a lemon, they must document everything. They keep detailed records of all repair attempts, including dates, what was repaired, and any correspondence with the manufacturer or dealer.
Then, vehicle owners notify the manufacturer with a written notice to the manufacturer detailing the defect and repair attempts. This notice is crucial for providing the manufacturer the final opportunity to fix the issue.
If defects persist after the prescribed repair attempts, the consumer can request a replacement vehicle or a refund. The refund typically includes the buying price minus a reasonable depreciation allowance for vehicle use.
In South Dakota, consumers may be required to participate in an arbitration process before pursuing legal action. Arbitration is a method of resolving disputes outside of court, where an arbitrator reviews the case and decides.
Some manufacturers have arbitration programs that must be used before filing a lawsuit. These programs are often faster and less formal than court proceedings.
If arbitration does not resolve the issue, consumers may file a lawsuit. If successful, the court can order the manufacturer to replace the vehicle or provide a refund. The court may also award attorney's fees and costs.
What Are the Fees for Buying a Car in South Dakota?
Buying a car in South Dakota entails different fees, such as taxes, registration, and lien notation. Insurance is the highest cost a buyer must pay when buying a vehicle in the state.
Purchase and Use Tax
In South Dakota, vehicle purchases are subject to a purchase-and-use tax. This tax is currently set at 4% of the vehicle's purchase price. Buyers must pay this tax when registering for a vehicle. The purchase and use tax helps fund state and local government services.
Certain individuals and entities qualify for exemptions from the purchase and use tax. These exemptions include:
- Government agencies
- Nonprofit organizations
- Native American tribes
- Vehicles transferred between close family members, such as spouses or parents to children
Applicants must present an exemption certificate at the time of registration to verify eligibility.
Lien Notation Fee
This notation fee applies if the vehicle is financed and there is a lienholder. Currently set at $10, it is required to note the lien on the vehicle's title. The lien notation ensures the lienholder's interest in the vehicle is legally recorded and protected.
Registration and Title Fees
Vehicle registration fees in South Dakota vary based on the vehicle's age, weight, and type. Passenger vehicles typically incur a standard registration fee, while larger vehicles, such as trucks and trailers, have higher fees due to their size and weight. Additionally, there are fees for specialty and personalized license plates, which are $25 annually.
When buying a car in South Dakota, new owners must pay a title fee to transfer ownership. The current title fee is $10. This fee is paid at the time of registration and is necessary to receive the official title document, which serves as proof of ownership.
Insurance Costs
Insurance premiums may vary from one provider to another. However, the average premium for the required minimum coverage starts at $350 per annum. For full coverage, the premiums can go as high as $2,000.
Younger or teen vehicle owners often pay higher insurance premiums than older ones. Driving records also impact insurance costs. Drivers who don't have any violations often have lower insurance than those who already have violation points.
What Are the Insurance Requirements for Vehicles in South Dakota?
In South Dakota, vehicle owners must comply with specific insurance regulations to legally operate their vehicles on public roads. These regulations are designed to ensure that all drivers have financial protection in case of accidents and to cover damages and injuries they may cause.
South Dakota mandates that all vehicle owners carry the following minimum insurance coverage:
- Bodily Injury Liability: minimum of $25,000 for every individual covered
- Property Damage Liability Insurance: at least $50,000 for every accident
- Uninsured/Underinsured Motorist Insurance (UMI): minimum per person $25,000 and $50,000 for one accident
UMI occurs when the liable party lacks insurance to cover the damage caused by the accident and subsequent medical costs. Vehicle owners should note that UMI and liability insurance are not stackable.
Owners may also purchase automobile insurance, including collision and comprehensive insurance, to protect their vehicles. They may also opt to get other insurance coverages, such as credit insurance if they have financed the purchase.
Failure to maintain the required insurance coverage in South Dakota can result in severe penalties, including fines and license suspension. Fines may start at $100.
Can a Non-Resident Buy a Car in South Dakota?
Non-residents are allowed to purchase vehicles in South Dakota. However, registering and titling the vehicle as a non-resident involves additional requirements and steps.
They need to provide proof of their out-of-state residency. This proof can include a valid driver's license, utility bills, or other official documents showing their permanent address outside South Dakota.
South Dakota has a seller's permit, which requires sellers to provide it to their buyers. This permit allows non-residents to legally drive the vehicle from the point of purchase to their home state. It is typically valid for 45 days and provides enough time to complete the necessary paperwork and registration in their home state.