Best State to Buy a Car (2024)

Car prices and overall costs depend on a variety of factors such as taxes, registration fees, dealer fees, and location. No matter how skilled you are at negotiation, car costs can still vary significantly by state.

Unfortunately, many drivers never consider these factors when purchasing a car, especially if they've lived in the same state all their life. Also, taxes are applied based on where you live rather than where you buy a car. Here's everything you need to know about the best state to buy a car.

Buying a new car? Easily compare rates from auto lenders below.

Best State for Initial Cost

The initial cost of a vehicle should always be one of your primary considerations when buying a car. If you're looking for the lowest initial cost, no state can beat Florida. When it comes to used car sales, Florida tends to has the cheapest prices.

Florida's low initial vehicle costs are due to a variety of factors. First, Florida has one of the largest populations of older people. As they start driving less, many people sell off their cars, giving you more options to find a great deal on a used vehicle.

Additionally, most vehicles in Florida stay in good condition due to the climate. In snowy northern climates, roads are salted to melt the snow. As cars drive through the salt, the salt itself can cause damage. While it takes years for this damage to be significant, it's usually present when the average person is ready to sell. Florida cars often have no salt damage to speak of.

Best State for Unexpected Fees

There are all sorts of fees you must pay when purchasing a vehicle. These fees are separate from the initial cost and can even vary from dealership to dealership within the same state. On average, Oregon has the lowest unexpected car fees. In fact, they typically won't run you more than $130 total when buying a car.

To put that price in perspective, we can take a look at the second-best state for unexpected fees, which is a tie between Alaska and New Hampshire. Unexpected fees there, on average, don't surpass $360, which is still extremely affordable compared with many other states.

Worst State for Initial Cost

The worst state for initial car costs is California, due to factors like the high cost of living, which has been steadily growing for years. California also has a relatively high sales tax rate (7.25%), expensive car repairs, and high gas prices, which make car ownership costly for many residents.

If you live in California and want a great deal on a car, choosing a used model is going to be your best option. Data shows that the average cost of a used vehicle nationwide is about the same as the average price in California.

Worst State for Unexpected Fees

If you're looking to avoid unexpected fees, you won't have much luck in Alabama. The unexpected fees in this state are significantly higher than in much of the country. On average, total unexpected fees come out to be around $2,313. That's nearly 18 times what you'd be paying in Oregon, and 14 percent of the average sales price of a vehicle.

There are a few other states that also have fees of around $2,000 dollars. These states are as follows:

• Arizona: $2,297, 13.9 percent of the average sales price
• Colorado: $2,284, 13.8 percent of the average sales price
• Tennessee: $2,061, 12.5 percent of the average sales price
• Florida: $1,869, 11.3 percent of the average sales price

States Without Sales Tax

Avoiding sales tax can be incredibly beneficial to your car purchase, but it's only possible in some states. Alaska, Montana, Oregon, Delaware, and New Hampshire have no statewide sales tax. You'll note that these states also generally correspond to the states with the lowest unexpected fees.

Best State for Auto Insurance

Car insurance is a legal requirement in most states, so it's important to consider this cost when purchasing a vehicle. Not all states are created equal when it comes to insurance rates. In fact, Michigan is so notorious for its high insurance costs that the government is working on policies to lower them where the free market has failed to do so.

To find the cheapest insurance, there's no better place to be than Maine, and that's not just because your likelihood of hitting a deer is low. For a policy that offers decent coverage, you'll only have to pay an annual premium of around $696. North Dakota and Iowa offer affordable insurance as well, with the same amount of coverage costing less than $720 annually. To put this in perspective, the national average is around $1,070 a year for full coverage.

Overall Best State to Buy a Car

While the best state will vary based on any given driver's personal needs, there is a clear general winner if you're looking for the most affordable state to buy a car in. The grand champion is New Hampshire. It doesn't rank as the best in any particular category, but it's the overall most affordable when you consider all the factors.

New Hampshire doesn't require a sales tax on vehicles, so that cost is removed entirely. Additionally, registration fees are remarkably low. Given the cost of insurance, cost of living, and the number of used cars on the market there, it could be relatively easy to find an affordable car you will be happy driving.

This is good news for New Hampshire drivers and anyone who plans on moving there soon. Remember, however, that these costs are determined by your state of residence, not where you purchase your vehicle, so keep that in mind when buying a new vehicle.