Vehicle costs typically fluctuate in response to supply and demand. Prices vary depending on make, model and other criteria, although the MSRP of a given vehicle is generally consistent between states.
However, each state has its own pricing for any applicable sales taxes, registration fees and other costs that affect the cost of a vehicle.
Which state is the cheapest to buy a car in? Is there one state in the United States with the most affordable vehicles?
Unfortunately for auto purchasers, no state offers cars at rock-bottom pricing. Buyers should not plan an out-of-state road trip to purchase their ideal vehicle.
However, some states have no sales taxes, lower fees and a larger selection of pre-owned or used vehicles.
Here are the states that are regarded as the least expensive for purchasing a car:
What State is the Cheapest to Buy a Car?
- New Hampshire
- Florida
- Oregon
- North Carolina
- Missouri
Buying a Car in New Hampshire
The result is almost unanimous: New Hampshire is the least expensive state to buy a car.
According to Autolist, the state does not charge sales taxes on autos. In addition, the site claims that fees and insurance expenses are inexpensive.
Gas prices in New Hampshire are generally considered moderate and acceptable. Drivers will not go overboard on fuel unless prices rise dramatically.
Why is Florida a Good State to Buy a Car?
Many customers may not consider Florida to be one of the least expensive states in which to buy a car.
After all, with theme parks like Disney and Universal Studios, Florida is both a retiree’s dream and a popular holiday destination.
While Florida does not have an income tax, it does impose a 6% sales tax on automobiles. Buyers may also need to pay local taxes (the rate varies by jurisdiction).
According to Autolist, Florida leads the way in terms of upfront prices. The website explains that because Florida has a large population of retirees or those over the age of 65, there may be numerous secondhand cars in excellent condition.
Another advantage for Florida drivers is the absence of severe cold weather. This means that the cars sold have not been exposed to snow or other severe cold weather conditions.
Oregon Has the Least Expensive Unexpected Fees
If you live in Oregon, you may be in a good position to buy a used car. Autolist claims that this state has the lowest ‘surprise fees’ in the country.
Oregon’s typical documentation fees (often known as ‘doc fees’) are $115, title fees are $77, and registration fees are $86.
What States Do Not Charge Sales Tax?
Some states do not collect sales tax. While just a few jurisdictions do not levy sales tax on automobile purchases, people who are fortunate enough to live in these states can save some money. The following states do not impose sales taxes on automobile purchases:
- Alaska
- Delaware
- Montana
- New Hampshire
- Oregon
What is the cheapest state to buy a new car?
The best state to buy a car is New Hampshire. The surprise expenses aren’t too bad when purchasing a car in New Hampshire. There are no state sales taxes or registration fees, which allows you to save money upfront.
How Can Buyers Prepare for Car Costs?
Every state has different sales tax rates, doc fees, and possibly additional expenses.
- How should customers plan for these additional costs when purchasing a vehicle?
- How can buyers set a budget?
Experts recommend that automobile buyers spend no more than 10% of their monthly take-home income on car payments.
While the monthly payment may include fees, sales tax is not always included. Car owners may be required to pay sales tax upfront and in full at the DMV.
When buyers receive a high tax bill, it can be a huge shock and perhaps a financial burden. Before beginning to research and shop for a new car, purchasers should check their state’s sales tax.
Find out if this can be folded into a loan or if purchasers must pay it separately; additionally, dealerships can assist buyers with information (just ask!).
If customers learn that this tax must be paid separately, they must develop a budget to cover the additional expense. Buyers can also study their monthly payment breakdown to better understand what is included in the monthly cost.
The terms of the sale should be specified in the contract and buyers should be able to compare various fees.
The Worst State for Buying a Used Car
Alternatively, the five states with the highest average used-car costs are:
- Alaska: $29,661 (26% above the national average)
- Wyoming: $29,425
- Montana: $27,309
- Arkansas: $27,129
- Idaho: $26,668
Best States with Low Car Fees
You should still anticipate paying more than the agreed-upon price with the vendor. Most of the time, you cannot avoid paying dealer documentation fees.
These contribute to the administrative costs of selling a car. Most states do not limit the amount owners can charge for paperwork, but some do.
There are no restrictions on how much a dealer can charge for paperwork, but Alaska mandates that the amount be included in the vehicle’s final price.
Currently, these states have the lowest average dealer document costs.
- California: $61
- Oregon: $67
- New York: $80
- Minnesota: $81
- South Dakota: $99
Furthermore, state sales taxes might affect how much a car costs. For example, if you purchase a new car in California for $45,000, the combined state and average city sales tax rate is 8.68%. This means you may pay an additional $3,906 in taxes.
State with the Best Initial Cost
Florida has the lowest starting price for cars due to its large elderly population and pleasant weather.
Used cars are frequently sold while still unused, making it an excellent area to locate amazing prices.
Salt damage can become visible with time but most vehicles are unaffected. Overall, Florida is an excellent place for vehicle purchasers.
State with the Worst Initial Cost
California has the most expensive beginning car prices. This is due to factors such as the high cost of living, which has been gradually increasing for years.
California also has a high sales tax rate (7.25%), high gasoline prices, and expensive motor repairs, making car ownership prohibitively expensive for many residents.
States without Sales Tax
However, the state sales tax is only one piece of the puzzle. In 38 states, there is an additional city sales tax on top of the state tax.
Local taxes vary by area. In some circumstances, the city sales tax rates are indirectly linked to the state tax, lowering the overall sales tax.
That is, one state’s sales tax rate may be high while another’s is low. This would make the overall tax rate more equitable and easier to manage.
According to the Tax Foundation, the top five states with the highest total sales tax rates are Tennessee (9.61%), Louisiana (9.58%), Arkansas (9.57%), Washington (9.29%), and Alabama (9.28%).
California has the highest sales tax in the country, but its lower municipal rates offset it; thus, it does not make this list.
The following states do not impose a national sales tax:
- Alaska (permits areas to charge local sales taxes)
- Delaware
- Montana
- New Hampshire
- Oregon
The following states have the lowest average combined rates:
- Alaska (1.82%)
- Hawaii (4.50%)
- Wyoming (5.39%)
- Wisconsin (5.49%)
- Maine (5.56%)
These are some of the cheapest places to buy a car in terms of taxes. Purchasing something outside of your state will not result in any savings on sales taxes.
That’s because taxes are based on where the vehicle is registered, not where it was purchased.
Is it okay to buy a car out of state?
Different states charge different pricing for different types of cars, such as Alaska, which has among the lowest sales taxes but also hefty levies for used vehicles.
It is critical to research and compare pricing before purchasing a car out of state, as you may have to travel through many states to obtain a specific make and model.
The Best State for Auto Insurance
In most regions, car insurance is required, so keep that in mind while purchasing a vehicle. Insurance premiums vary by state.
Michigan is recognized for having extremely costly insurance, so the government is working on guidelines to reduce costs because the free market has failed to do so.
Maine is the best spot to find affordable insurance, and it’s not simply because there’s no risk of hitting a deer.
You will only have to pay roughly $696 per year for insurance that provides adequate coverage. Insurance is likewise inexpensive in North Dakota and Iowa; the same coverage costs less than $720 per year in both states. To give you a sense of the price, the national average for complete coverage is approximately $1,070 per year.
Frequently Asked Questions.
Which state offers the cheapest cars?
New Hampshire is the cheapest place to buy a car. When purchasing a car in New Hampshire, you will encounter a few hidden expenses.
You can save money up front because there are no state sales taxes and simply a few registration expenses.
In which three states are vehicles the most expensive?
The most costly states to own a car in the United States are California and Nevada, followed by Colorado, Florida, and Alaska.
Why buy a used car in the United States?
Experian reports that in the third quarter of 2023, the average monthly payment for a used car was $533, while the average monthly payment for a new automobile was $726.
Every little bit helps, and purchasing a used automobile rather than a new one might result in significant savings.
