Why Do Rental Cars Have Out-of-State Plates?

Why Do Rental Cars Have Out-of-State Plates?

Have you ever noticed that when you rent a car, you always get an out-of-state plate? Why exactly is that? Is there a reason that rental cars always seem to have out-of-state plates?  

Rental cars often have out-of-state plates because they were registered in a state with low/no car registration fees. Out-of-state plates may also be due to seasonal demand or one-way rentals leaving cars in different states. Finally, cars rented in northeastern states often have out-of-state tags.

In this article, I’ll explain in more detail why rental cars have out-of-state plates, and I’ll give you some helpful tips on car rentals. 

Reasons Rental Cars Have Out-of-State Plates

When you go rent a car from a different state, you expect that the tag may not be from your home state. However, what you may not expect is that the tag probably won’t be from the state you’re currently renting the car from either. 

As mentioned above, there are a few different potential reasons for this phenomenon. I’ll explain each of them below. 

Some States Have Low or No Car Registration Fees

Did you know that each state can set its own vehicle registration fees? And have you ever wondered why there seems to be a preponderance of rental cars with Utah, Colorado, or Michigan plates? 

Since rental car companies buy cars in large volumes, it makes sense that they buy their vehicles in a state with low or no vehicle registration fees, as the savings can be huge.

Car registration fees can change annually, but Florida, Montana, and Iowa have the highest fees, ranging between $100 and $200. Colorado, Idaho, Michigan, New Jersey, and Utah don’t have registration fees, while Arkansas and Arizona’s fees are less than $20. 

One-Way Car Rentals Leave Cars In Different States

Not all car rental customers pick up their rental car and drop it off in the same location. An example is someone making a road trip across the country and then flying home. Or you may be a non-car-owning New York City resident relocating to Florida, and you need a rental car to get you to your new home. 

Picking up and dropping off your rental car in the same location makes it easier for the car rental company to manage their stock. However, it’s not always possible. That’s the reason they’ll charge an extra fee for a drop-off in a different location. It could also be the reason your car has an out-of-state tag.

Seasonal Demand

Car rental companies don’t typically have static stock, and they move their cars around to wherever the demand is most significant. 

There’s an increased demand for rental cars during the summer at popular vacation destinations, such as coastal towns and cities and mountain resorts. Many people like to spend a few weeks in a warm and sunny place like Florida or Arizona in the winter. 

A car rental company will move its stock to a high-demand place in any of the following ways: 

  • In bulk on car carrier trailers. This is the most common method as it’s very efficient, and many cars can be transported at once. 
  • Paying drivers to move the rental cars. A popular money-earning gig for retired or laid-off folks is to drive rental cars where they’re needed. 
  • Offering customers low rates for certain one-way routes. In the middle of winter or summer, car rental companies often offer excellent deals on specific one-way plans (e.g., collecting a rental car in Philadelphia and dropping it off in Phoenix).

Smaller States Have More Out-of-State Plates

In small northeastern states, such as Rhode Island, Maine, or Massachusetts, you don’t need to drive far to enter the next state. It’s common in these states for people to pick up a rental car in Boston, for example, drive it over the state line, and drop it off in Hartford, Connecticut. 

If you’ve noticed that rental cars have out-of-state plates, you might also note that it’s much more common in the northeast.

What Are Some Car Rental Tips? 

Now that I’ve explained why rental cars can have out-of-state plates, you might wonder if there are car rental tips to enhance your experience.

Some car rental tips include considering a non-airport car rental branch, checking if you need insurance, and planning when and where to fill the tank. You should also check the car carefully before you drive off. 

I’ll discuss these tips in more detail below: 

Consider a Non-Airport Branch

If they’re flying into a city, most travelers like to pick up their rental cars at the airport, which is the most convenient option. 

Budget-conscious travelers, however, should consider picking up a rental car from a non-airport branch as the rates can often be lower. Depending on the public transport options in the city and how much luggage you have, you might be able to buy a cheap train or bus ticket to the suburbs.

Car rental branches in the suburbs are also usually not as busy as airport ones, and there will likely be fewer lines. Additionally, you may have more vehicles from which to choose. 

Check if You Need Insurance

Car rental companies expect customers to return cars in the same condition in which they left. This means that if you’re in a wreck or you damage the rental car, you’re liable. 

Most car rental companies offer customers comprehensive insurance for an additional amount, but it’s worth checking if you’re already covered. 

You might already be covered for personal liability or collision damage of a rental car with your current insurance policy. This is normally only applicable if you’re renting a vehicle within the US or Canada, and you might have to pay a large deductible for a rental car.  

You might already have coverage through your credit card if you’ve used your credit card to pay for your car rental. 

If you don’t already have rental car insurance coverage, you could always take out a standalone policy, which is typically cheaper than the ones that car rental companies offer. 

Plan When and Where To Fill the Tank

Most car rental companies provide customers with a full tank of gas and stipulate in the car rental contract that customers must return the car with a full tank. 

Vacations and business trips can be busy, and it’s tempting to fill the tank at the airport gas station. However, airport gas stations can be more expensive, and if you’re on a budget, you might want to shop around to find a more reasonably-priced gas station not far from your drop-off point.  

Check the Car Carefully Before Leaving

As mentioned already, when renting a car, you need to ensure that you return it in the same condition you fetched it. Car rental companies typically point out any scratches or defects on the car in your contract, but you may be liable if you don’t let them know they’ve missed something. 

No one enjoys taking care of tedious administrative tasks at a car rental company, but carefully checking your rental car before leaving might save you a lot of money and hassle. 

Here’s what you should check on your rental car before leaving: 

  • Scratches, chips, or dents in the paintwork 
  • Windscreen cracks
  • Tire and wheel damage 
  • Faulty lights
  • Broken knobs or a malfunctioning car radio
  • Upholstery stains or tears

If you’d rather travel without a rental car, I discuss how to go on vacation without one in this article.


It’s common for rental cars to have out-of-state plates. The reasons include:

  • Low or no car registration fees in some states
  • Seasonal demand
  • One-way car rental contracts

Furthermore, if you’re renting a car in a northeastern state, it’s more likely that you’ll receive a car with an out-of-state plate as these states are geographically smaller.


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