Top 10 States Where You'll Pay the Least for Cars: A Money-Saving Guide

When shopping for a vehicle, most buyers focus on the sticker price and their monthly payment. What many don’t realize is that the state where you make your purchase can dramatically affect your total cost of ownership. According to data analyzed by financial experts, the impact of choosing the right location can easily amount to thousands of dollars in savings. Understanding which states offer the best deals requires looking beyond just advertised prices—it’s about examining how sales taxes, dealer fees, and regional pricing all work together.

Understanding Car Costs: What Makes One State Cheaper Than Another

The cost of buying a car varies considerably across the country, with the national average for a new vehicle sitting around $48,000. However, this average masks significant regional differences. When evaluating which is the cheapest state to buy cars, researchers analyzed multiple data points: the actual prices dealers charge for new and used vehicles, the percentage sales tax imposed on purchases, and the administrative fees charged to complete transactions.

These three factors combine to determine your true out-of-pocket expense. A state might have lower vehicle prices but higher taxes, or vice versa. The research, which drew from authoritative sources including Kelley Blue Book, ISeeCars, AARP, and LendingTree, revealed surprising patterns about where consumers genuinely get the best value.

One key finding: dealer fees can vary dramatically. Some states average $300-400 per transaction, while others routinely charge $2,700 or more. When multiplied across the purchase, this difference alone can swing affordability calculations entirely.

States With No Sales Tax: The Clear Winners for Affordability

Several states have recognized the burden of sales tax and eliminated it on vehicle purchases entirely. These jurisdictions immediately rank among the cheapest state to buy cars, simply because they remove one major expense category.

Oregon leads this group. With zero sales tax and remarkably low dealer fees—the second-lowest in the nation—buyers find themselves with substantial savings. Even though vehicle prices themselves are slightly above average, the absence of tax and minimal transaction costs more than compensate.

Montana follows a similar formula. Though car prices there run 15% above the national average, zero sales tax combined with rock-bottom dealer fees (third-lowest nationwide) place it as one of the nation’s most affordable markets.

New Hampshire and Delaware offer the same tax advantage. New Hampshire particularly impresses because car prices already run about 5% below the national average, meaning buyers benefit from both lower prices and no sales tax. Delaware’s slightly higher vehicle prices limit its competitiveness, but it still ranks solidly for affordability.

Beyond Taxes: How Dealer Fees Reshape Affordability

Some of the most dramatic variations emerge in what dealerships charge to complete a transaction. These fees can range from under $400 to nearly $2,800 depending on location.

Alaska presents a fascinating case study. New and used car prices there run 20% or more above national averages—among the highest in America. Yet the state ranks in the top four for cheapest car buying, primarily because dealer fees are the absolute lowest in the nation at just $315. This demonstrates how fees can overcome even significant price disadvantages.

Wisconsin and Virginia both fall into the middle range for affordability. Wisconsin has moderate sales taxes (5.43%) and relatively low dealer fees, while maintaining prices just slightly above average. Virginia similarly balances moderate taxes with competitive pricing. Both represent solid options for buyers seeking balanced affordability.

The Overlooked Factor: Vehicle Pricing Variations by Region

While taxes and fees get attention, the actual prices dealers charge for vehicles themselves vary surprisingly little—usually within a few percentage points of the national average. However, these modest variations matter cumulatively.

Hawaii surprises many shoppers: vehicle prices there are actually 3.5% below national averages. Combined with a low sales tax of 4.44%, this Pacific island state demonstrates that geography doesn’t automatically mean higher costs.

North Carolina and New Mexico both position themselves as mid-tier affordable options. North Carolina’s relatively high sales tax is offset by low dealer fees and competitive pricing. New Mexico, despite the 16th-highest sales tax in the nation, compensates through reasonable pricing and modest transaction costs.

Your Cheapest State to Buy Cars Depends on Your Priorities

There’s no single answer to finding the cheapest state to buy cars because priorities differ. If you prioritize zero sales tax, states like Oregon and Montana offer clear advantages. If you’re shopping for used vehicles specifically, focus on states with lower used-car dealer fees—often different from new-car fee structures.

For those unable to relocate or travel for purchases, the good news is that even within expensive states, understanding these cost factors helps. Some buyers find that shopping across state lines—whether through delivery arrangements or timing a purchase during a trip—can justify the effort.

The research methodology underlying these rankings examined vehicle values from 2023, comparing each state across multiple affordability dimensions. Prices, tax rates, and dealer fee structures were weighted equally to determine overall rankings. While specific prices fluctuate with market conditions, the relative positioning of states tends to remain stable, making this analysis useful for ongoing purchase planning.

Whether you’re buying new or used, the state selection matters more than many realize. Taking time to evaluate these cost components could result in significant savings on one of life’s major purchases.