How much you pay for a new car will depend largely on where you purchase it. This is because of differences in demand, competition in each location, and things such as sales tax that can cause price differences between states. Even with all of your planning and budgeting, you might drive off the lot paying thousands of dollars more than you expected in some states.
If you’re living near the border of one of the best states to buy a car, it might be worth the trip to make your purchase.
Best State for Initial Cost
Florida is one of the best states to buy a used car in. Vehicles in Florida are around 10% cheaper than the national average. About 20.5% of Florida’s population is over 65 years old. Because Florida has an aging population, many drivers turn in their cars every year due to impaired eyesight or other age-related reasons for no longer driving. Older people also tend to take better care of their vehicles than younger people.
This causes the supply of used vehicles in Florida to be large, allowing prices to remain low. Additionally, wealthier Florida residents tend to sell their vehicles often to buy the newest models.
This also opens up a market for luxury vehicles at significantly lower prices. As a bonus, most Florida vehicles haven’t experienced the wear of snow or the salt used on roads in the winter, so they’re likely in great condition.
On the other hand, California is the worst state for the initial vehicle cost. California has an overall high cost of living, and there is a much smaller market for used vehicles. This makes their prices much higher and the competition for them fiercer.
Best States for Unexpected Fees
If you’re worried about getting duped by unexpected fees, Oregon is a great place to purchase a vehicle. According to The Balance, the initial car-buying fees are typically around $150 or less, which is a fraction of what fees run in other states. Alaska and New Hampshire are also fee-friendly states. Fees in these states typically don’t run more than $360. However, some states have exorbitant fees that can run your car vehicle right out of your budget.
The states with the highest unexpected fees are below. In parentheses is what percentage of the average sales price the fees cost: Alabama at $2,313 (14%), Arizona at $2,297 (13.9%), Colorado at $2,284 (13.8%), Tennessee at $2,061 (12.5%), and Florida at $1,869 (11.3%). Alabama’s average unexpected fees are about 18 times that of Oregon’s.
States Without Car Sales Tax
A single-digit sales tax may not seem like a big deal, but when you’re purchasing something worth thousands of dollars, like a vehicle, sales tax can be a considerable burden. Having no sales tax can save you a lot of money upfront on your car.
Five U.S. states have no sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
The state with the lowest non-zero sales tax is Colorado, which has a sales tax rate of 2.9%.
Five states follow with the next lowest sales tax rate of 4%:Alabama, Georgia, Hawaii, New York, and Wyoming.
States With Most Expensive Combined Sales Tax Rates
There are five states that you might want to avoid when purchasing a vehicle. So, be careful and do your research.
- Tennessee (9.55%)
- Louisiana (9.52%)
- Arkansas (9.51%)
- Washington (9.23%)
- Alabama (9.22%)
States with the Cheapest Auto Insurance
Car insurance is required by law in most states. Rates differ based on your location and your vehicle make and model, so insurance is an important factor to consider when purchasing a car. Maine has the cheapest car insurance of any state.
Annual premiums in Maine are around $864, hundreds less than the national average of $1,318 per year. Ohio and Idaho also have affordable car insurance rates of less than $1,000 per year. Michigan has the highest car insurance costs in the country. Michigan’s car insurance is so high that the government is working on policies to lower them.
Overall Best State to Buy a Car
New Hampshire is the overall best state to purchase a car. New Hampshire has relatively low unexpected fees for purchasing a car. You can save on upfront costs by the lack of state sales taxes and low registration fees. Insurance premiums are relatively low in the state as well at around $941 per year. The average annual cost of car ownership in New Hampshire is around $2,691.
Florida is the second-best state to buy a car in. While it has the lowest initial car prices due to its large market, it has a 6% sales tax. Additionally, Florida’s registration and title fees are much pricier than New Hampshire’s. Florida’s average car insurance rate is $1,878 per year, which is about 31.% more than the U.S. average.)
