Buying a car is an expensive undertaking regardless of the sticker price. Nationally, average vehicle prices 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.
Car dealers may charge extra, too, to make more profit. But there is good news: It can be significantly cheaper to buy and own a car in some states than others. Here's some advice on where the most affordable states to buy a used car are, plus things to look out for in the process.
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.
What's the best state to buy a used car?
When looking for a used car, Florida has some of the cheapest options available. Within the state of Florida, the city of Miami is known for having some of the least expensive vehicles. That is partly because the large older population sells its cars more than in other cities. Thus, there are more used choices and at more affordable prices.
Miami and some surrounding parts of Florida have many wealthy residents. That demographic also sells their cars more frequently. Additionally, it allows for a selection of high-end vehicles, such as Aston Martins to Lamborghinis.
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 mostly free of rust due to never encountering salt used for melting snow, so they are often in excellent condition.
What state has the lowest car-buying fees? Oregon
Oregon has the lowest car-buying fees in the U.S. This can be an important factor to consider when purchasing a new car since they can really add up; everything from documentation fees to DMV charges to anything a dealership may impose.
The initial fees that come into play when buying a car in Oregon will only run you up to a maximum of $150 at a dealership. Similarly, car buyers living in Alaska and New Hampshire do not have to worry about exorbitant fees, with those states maxing out around $360.
Those costs compare well to more expensive states that can charge more than $2,300. Alabama, Arizona, Colorado, Tennessee, and Florida have some of the highest fees in this regard.
What Are the Best States to Own a Car?
The sticker price of the car and the associated fees are not the only thing to keep in mind when buying a new car. There are several maintenance and insurance fees to consider as well.
New Hampshire has some of the most affordable fees. As of 2016, the initial one-time fee associated with the purchase was just $25. The average annual cost of ownership of a car in New Hampshire, including auto insurance and gas costs, is $2,691.
One of the great things about getting a car in New Hampshire is that there is zero sales tax for vehicle purchases, which can save you a lot of money upfront. Only four other states have no sales tax on vehicle purchases: Oregon, Delaware, Montana, and Alaska.
Insurance premiums are relatively low in New Hampshire as well. According to US News, the typical annual rate for a driver in 2021 is $886.78 -- the country's second-lowest premium.
Another state without sales tax, Montana, boasts low car insurance rates, averaging about $700 annually. Gas prices are lower than the national average, too. Montana is an excellent place to look for SUVs and four-wheel-drive trucks because of its climate and terrain.
Well-heeled mountain resort towns have many high-end vehicles such as Land Rovers, Audis, and Mercedes-Benzes. Montana borders several more populated states, and it's easy to search inventories elsewhere without incurring costly cross-country shipping rates.
This is also why you'll see exotic sports cars in cities in high-tax states like Los Angeles or San Francisco with Montana plates; the owner likely has either a residence in Montana or an LLC that lets them avoid paying the higher state's taxes.
As of 2021, North Carolina had a statewide sales tax of 4.75 percent. That rose from 3 percent only a few years ago. However, it's still substantially lower than several other, similarly-sized states. North Carolina is also an affordable place to buy and insure a new vehicle.
As of January 1, 2021, the Ohio sales tax rate for cars was 5.75 percent. That's higher than some other states on the list and can raise initial and overall costs. But the sales tax can be offset by the insurance premiums, which are the second-lowest out of all 50 states. Ohioans also get cheaper gas prices and car maintenance fees than many other owners.
Virginia has some of the most expensive repair costs in the country, so maintaining a vehicle can impact owners significantly. However, auto insurance premiums and gas prices are relatively less costly than other states, which is good news for residents. The initial purchasing fees, including registration and title fees, are even cheaper in Virginia than in Ohio.
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 myriad opportunities for savings.
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 more 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 can 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 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.