The Overall Best State to Buy a Car
New Hampshire wins as the best state to buy a car. Here's why:
- They have relatively low unexpected fees associated with the car buying process.
- You do not have to pay sales tax.
- They have low registration fees.
- New Hampshire boasts affordable insurance premiums at an average of $941 annually.
- The average annual cost to own a car in New Hampshire is $2,691.
This is great news for New Hampshire residents who are ready to buy a new car and for anyone planning to move to New Hampshire soon.
Buying a car is an expensive undertaking regardless of the sticker price. Nationally, average vehicle costs continue to rise, and the COVID-19 pandemic made used cars hotter commodities in 2020 and beyond. Additionally, many states add expensive fees, sales tax, and department of motor vehicle charges. Regardless of how skilled you are with negotiation, all these costs vary from one state to another. Car dealers may charge extra, too, to make more profit. But there is some good news: It can be significantly cheaper to buy and own a car in some states than others. In this article, we explore the best state to buy a car to help you on your way to finding a great deal.
The Best State for Initial Fees: Florida
One of the first things to consider during the car search and buying process is the initial cost. The price of a new or used car model is not the same across all states, so shopping around and knowing the facts can be beneficial.
When looking for a used car, Florida has the lowest initial costs. According to Autolist, Florida's initial rates are typically ten percent lower than the national average in the U.S., which means you can save some serious money.
The low initial costs in Florida are due to several factors:
Florida has a large population of older people. Since they drive less through the years, they sell their cars. This opens up a window of opportunity to find the best deal on a used car. One of the best aspects of purchasing a car in Florida is that the vehicles have most likely never seen snowy weather conditions. The frames and underbody components remain primarily free of rust due to never encountering salt used for melting snow, so they are often in excellent condition.
In case you were wondering, California is the worst state for initial costs. The general cost of living in California is extremely high, and there are no signs of the high expenses slowing down anytime soon. Furthermore, unemployment is a significant factor too, which means there are many financially challenged homes, so they are holding onto their vehicles.
The Best State for Unexpected Fees: Oregon
While initial costs need primary consideration, they are not the only fees related to a car purchase. There are multiple costs to keep in mind when buying a car besides just the purchase price. They can add up quickly too, everything from documentation fees to DMV charges can sneak onto your list of unexpected fees. Unfortunately, to complicate matters, they vary from one dealership to another.
If you want the cheapest state to buy a used car when it comes down to low unexpected fees, then Oregon is first on the list. Oregon has the lowest unexpected fees, and generally, you will not pay more than $130 in total during the car buying process.
After Oregon, the following best states for low unexpected fees are Alaska and New Hampshire. In these states, the fees should not exceed $360, which is actually highly affordable compared to other states, like Alabama.
Alabama has the worst unexpected fees. On average, you could pay roughly $2,313 just in those fees alone. That's eighteen times more than what you would pay if you bought a car from Oregon.
Below are some more examples of the average fees in various expensive states that will make a significant dent in car buyer's pockets:
- Arizona: $2297, 13.9% of the average sales price
- Colorado: $2284, 13.8% of the average sales price
- Tennessee: $2061, 12.5% of the average sales price
- Florida: $1869, 11.3% of the average sales price
States Without Car Sales Tax
Curbing as many fees associated with the car buying process lowers the amount of cash paid upfront for your new vehicle, or it will reduce your monthly payment amount on your auto loan. Avoiding car sales tax can be incredibly beneficial since it will save you a lot of money; however, it is not possible in most states.
The following states have no statewide car sales tax:
- New Hampshire
Does the list sound familiar? You may notice that the states mentioned above are also associated with having the lowest unexpected fees. This means they are very well-rounded as some of the cheapest states to buy a used car.
The state with the lowest non-zero car sales tax is Colorado (2.9%).
After that, the following states have the lowest sales tax rate of 4%:
- New York
Best State for Auto Insurance: Maine
In most states, auto insurance is a legal requirement and one of the most expensive recurring costs of owning a new or used vehicle. Not all states share the same regulations for auto insurance, and the insurance rates vary from one state to another.
Maine is the best state for auto insurance. This state has the lowest representative prices for auto insurance spanning across a wide variety of profiles. On average, you could pay $865 a year for car insurance coverage in Maine.
The ten cheapest states for auto insurance costs include the following:
- Maine: $865
- New Hampshire: $870
- Ohio: $886
- Virginia: $991
- Wisconsin: $998
- Idaho: $1,010
- North Carolina: $1,018
- Vermont: $1,063
- Indiana: $1,068
- Iowa: $1,071
If your home state is Michigan, you will know that they are one of the most expensive states for auto insurance. Michigan has an annual average rate of $2,130.
The five most expensive states include:
- New York
- Washington D.C.
Below are some of the factors that affect the insurance premiums of vehicles in different states:
- Legal requirements
- Traffic congestion
- Economic conditions
The Best States to Buy a Used Car
Before we get to the overall winner of the best state to buy a used car, let's look at some of the contenders at the top of the list.
Florida is the second-best state to buy a car in the US. Their large automotive market means that they offer the lowest initial car prices, while you get to enjoy an extensive inventory of options. Vehicles in Florida cost around ten percent less than the country's average; however, their registration fees and car sales tax are slightly higher than other states.
Below is why North Carolina is one the cheapest states to buy a used vehicle:
- Low car sales tax at only 3%.
- Relatively low title and registration fees associated with the vehicle purchase.
- Affordable auto insurance.
- The maintenance fees and upkeep costs are affordable in North Carolina.
Missouri earns its place as one of the cheapest states to buy a car because:
- Their initial costs are average compared to other states.
- Their gas prices are amongst some of the cheapest in the U.S.
- Most of their car-buying expenses, including ownership, transportation, title, and registration fees, are more reasonable than most states.
- Their car insurance fees are also relatively low.
Ohio is also a cheap state to buy a used car for the following reasons:
- Insurance premiums in Ohio are one of the lowest.
- Gas prices and maintenance fees are also ranked one of the lowest in the country.
Do Your Research
When buying a car from out of state or even in your home state, always do extensive research first if you want to get the best deal and lower the overall price of the car.
Car prices can fluctuate, and specific car models may be less expensive in some states for various reasons. Knowing the make and model of the car you want beforehand can open a myriad of opportunities for saving lots of money. For example, listing prices on Toyota RAV4s tend to be much cheaper in Maine and Delaware than in states where all-wheel-drive and SUVs are less plentiful.
A Ford Fusion Hybrid may be more expensive in California, where gas prices are high, and many commuters need excellent fuel economy. The best deals on a Ford F-150 are typically in Missouri, Rhode Island, and other places where pickup trucks are popular. Small and remote states like Hawaii may have good deals, but you'll pay a high price for shipping the vehicle to another part of the country.
Although shopping across several states to find lower prices may save money, each state has different registration fees and sales tax that can drive up the cost. Additional fees may also be added if the car is purchased in a place without sales tax but registered in one with it. Getting an old vehicle to comply in states with smog and emissions tests (such as California) or regular inspections can also affect the bottom line. Few out-of-state car dealers will let that affect the sales price.
Private sellers may be more reluctant to work with you on transporting a vehicle than a dealer. Be sure to work out those terms before finalizing the deal.
Buying a car out of state may be complicated, but it is great if you cannot find the model you are looking for locally. Doing your research will enable you to understand the various state requirements and what costs need to be considered when bringing the new vehicle home.