Best States to Buy a Car: How to Save Thousands (+ tips)

Best States to Buy a Car

A couple buying a car in a dealership

Are you looking for your dream car? Whether you’re looking for a brand-new vehicle or a dependable used vehicle, the state in which you purchase it might make a significant difference in the overall cost.

Fortunately, some states have lower average vehicle prices and car-related taxes, making them an excellent alternative for car buyers. This article will look at the best states for buying new and used cars, this will serve as your guide to out-of-state car buying.

So, whether you’re looking for a great offer or simply want to ensure you’re getting the most value for your buck, we’ve got you covered. Have fun car hunting!

Table of Contents

Best State For Initial Fees

Florida is one of the most fantastic places in which to purchase a used car. Vehicles in Florida are approximately 10% less expensive than the national average. Approximately 20.5% of Florida’s population is above the age of 65. Because Florida has an aging population, many drivers retire from the road each year owing to failing eyesight or other age-related factors. In addition, older people tend to take better care of their vehicles than younger people.

Best State For Unexpected Fees

Salesman talking to a potential car buyer

If you’re concerned about being taken advantage of by hidden costs, Oregon is a fantastic spot to buy a car. The first car-buying fees are often approximately $150 or less, which is a fraction of what other states charge. Fee-friendly states include Alaska and New Hampshire. Fees in these states are usually a little more than $360. However, some states have hefty fees that can completely wipe out your money.

States with the highest average fees in the country include Arizona, which charges 13.9% of the vehicle’s average sales price, and Tennessee, which charges 12.5%. High sales tax payments significantly reduce a consumer’s purchasing power, making an out-of-state vehicle purchase desirable.

Best State For Auto Insurance

Annual premiums in Maine are roughly $864, boasting the lowest car insurance rates of any state, which is hundreds of dollars less than the national average of $1,318. Ohio and Idaho also have low annual vehicle insurance prices of less than $1,000. Michigan has the highest automobile insurance rates in the country. Michigan’s car insurance is so expensive that the state government is working on strategies to reduce it.

States Without Car Sales Tax

New Hampshire, Alaska, Montana, Oregon, and Delaware are among the states that do not impose a sales tax on vehicles. Although these states do not have a statewide sales tax on autos, some cities or counties within these states may have a municipal sales tax. Furthermore, other taxes and costs involved with acquiring a vehicle, such as registration fees, title fees, and taxes on auto parts and labor, may still apply in these states.

If not a tax-free policy, the best state to buy a car in should have a modest percentage. Colorado is one of these states. It is always advisable to study the specific taxes and fees associated with purchasing a vehicle in the state in which you intend to buy it and to speak with a tax professional if you have any doubts.

It’s also worth noting that some states may levy a “Usage Tax,” which is similar to a sales tax but is charged on the use of the car rather than the purchase.

States With The Most Expensive Combined Sales Tax Rates  

According to the Tax Foundation, the following states have the highest combined state and average local sales tax rates in 2022:

  • Tennessee (9.55 %)
  • Arkansas (9.48 %)
  • Louisiana (9.55%)
  • Alabama (9.22%)
  • Washington (9.29%)

It’s crucial to note that these are typical state and local sales tax rates, and the exact rate may vary based on where you live in the state. Furthermore, these rates are subject to change and may fluctuate.

It’s also crucial to remember that sales tax rates are only one aspect to consider when calculating the total cost of a purchase. Other factors, such as the item’s price and any applicable discounts or incentives, can also affect the overall cost.

It is always advisable to research the exact taxes and fees associated with acquiring an item in the state in which you want to purchase it and to speak with a tax professional if you have any queries.

Best and Cheapest States To Buy a New Car

A woman buying a car

New Hampshire is the best state in which to buy a vehicle. The unexpected fees when acquiring a car in New Hampshire are relatively minimal. Because of the lack of state sales taxes and minimal registration fees, you can save money upfront. Insurance premiums in the state are also quite modest, at roughly $941 per year. In New Hampshire, the average yearly cost of car ownership is roughly $2,691.

Florida is the second-best state for automobile purchases. Due to its wide market, it has the lowest starting car prices, although it has a 6% sales tax. Furthermore, Florida’s registration and title fees are significantly greater than those in New Hampshire. The average car insurance rate in Florida is $1,878 per year, which is approximately 31% higher than the national average.

Finally, shoppers purchasing a vehicle in North Carolina will profit from the state’s low title and registration fees, as well as the 3% car sales tax.

North Carolina also has numerous extensive metropolitan areas, which means there are more vehicle maintenance locations. As a consumer, having more alternatives means saving money on any repairs or maintenance that your vehicle need. North Carolina is also ranked sixth among states with the lowest vehicle insurance prices. As a result, they are one of the greatest states in which to purchase a new car.

Best and Cheapest States To Buy a Used Car

Because of the increasing prices of new cars as a result of global production issues, purchasing a used car seems more than sensible. New Hampshire remains the leading state in the United States. New Hampshire may not be the greatest in every category, but the overall expenses will be the lowest. When you buy a car in this state, you are exempt from paying sales tax on vehicles. Furthermore, registration fees are quite modest (up to $18 per thousand of the entire purchase price). 

Even insurance premiums are astonishingly low (about $870 per year). As you can see, New Hampshire is the most affordable state for new and used car purchases.

It’s worth noting that Florida and Oregon are viable choices. Florida’s lowest starting cost can explain its unanticipated expenses. Furthermore, Florida cars will be in much better shape, which is a huge long-term benefit. Oregon is a strong overall choice, with ten times less unexpected costs than Florida and no sales tax on automobiles. Both are easily the cheapest states in which to buy a secondhand car.

What Should You Know Before Buying a Car Out Of State?

Before purchasing a car from another state, consider the following:

  • Tax laws: Because sales taxes on vehicles vary widely from state to state, it’s critical to research and compare the taxes in the state where you plan to buy the car and the state where you plan to register it.
  • Vehicle registration: Because each state has its own rules and regulations for registering a vehicle, it’s essential to check the requirements and costs in the state where you intend to register the car.
  • Emissions and safety inspections: Some states may have different standards for emissions and safety inspections than your state, so it’s vital to research these regulations before purchasing a car.
  • Insurance: Check with your insurance company to ensure that your current coverage will cover the car you intend to buy out of state.
  • Transportation: If you intend to have the car transported back to your home state, do your homework and compare the costs of various modes of transportation.
  • Warranty: Confirm that the vehicle you intend to purchase out of state still has a valid warranty or service contract that will be honored in your home state.

When buying a car out of state, you can make an informed selection by considering these factors and conducting research.

Overall Best State To Buy a Car

The best state overall to buy a car in New Hampshire. For buying an automobile, New Hampshire has very few unexpected expenses. The lack of state sales taxes and cheap registration fees provide for upfront cost savings. The state’s insurance premiums, which average $941 a year, are also quite affordable. In New Hampshire, the cost of owning a car is around $2,691.

FAQs About Best States to Buy a Car

What is the car’s friendliest state?

New Hampshire and Florida are two of the states that are the most car-friendly, and there is a significant difference in expenses and pricing for used and, to some extent, new automobiles when compared to areas like Alabama or Colorado.

What month is it best to buy a car?

In general, the end of the year may be the ideal time to buy a car because dealers are attempting to get rid of their inventory. To move cars off their lot, they frequently offer discounts and other specials. It can be a good idea to research any extended factory warranties before purchasing because certain months may have them.

Is it cheaper to buy a car out of state?

Depending on the dealership’s offer, taxes, and travel expenses, purchasing a car outside of your state can be more affordable or more expensive. Before making a choice, it is advised to do your homework, compare pricing at several dealerships, look for discounts and incentives, and account for all expenditures such as transportation, taxes, and registration fees.

 

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