TOP Cheapest State to Buy a Car

Why Car Prices Vary by State

If you’ve ever wondered why buying the same car in two different states can lead to totally different price tags, you’re not alone. It’s not just the dealership markup—it’s the layers of hidden costs that most people overlook.

Here’s what makes a car significantly cheaper (or more expensive) depending on where you buy it:

 Key Factors That Impact Car Prices by State

• Sales Tax Rates: Some states charge zero sales tax on vehicles (hello, Oregon and New Hampshire!), while others can tack on as much as 7–10%.
  
• Registration and Title Fees: These vary wildly. For example, Arizona might charge a flat fee, while California calculates based on the car’s value.
  
• Insurance Premiums: Your ZIP code affects your rates—urban areas tend to be more expensive due to higher accident and theft rates.
  
• Smog & Safety Inspections: Some states require emissions testing, which adds extra cost and effort before you even drive off the lot.
  
• Dealership Competition: States with more dealerships often offer better pricing due to higher competition.
  

These elements stack up fast. That’s why researching the total cost of owning a car by state is crucial before making your purchase.

What Makes a State ‘Cheap’ for Car Buying?

When we talk about the cheapest state to buy a car, we’re not just talking sticker price. True affordability means evaluating the entire cost picture—especially those pesky after-purchase expenses.

Let’s break it down.

What You Should Look For

1. No (or Low) Sales Tax
   
   • States like Montana and New Hampshire charge no vehicle sales tax. That alone could save you hundreds, if not thousands.
     
2. Low Registration & Title Fees
   
   • In some states, you’ll pay a flat registration fee, while others base it on the car’s age or value. Look for flat-fee states like Oregon or Delaware.
     
3. Affordable Insurance Rates
   
   • Insurance costs can be a deal-breaker. According to U.S. News & World Report, states like Idaho and North Carolina consistently offer some of the lowest premiums.
     
4. Minimal Emissions or Inspection Requirements
   
   • If you’re buying used, emissions testing could be a headache—and a cost you didn’t budget for. Avoid states with strict inspection laws if you’re aiming to save.
     

 Pro Tip:

Always calculate the out-the-door price, not just the sticker. That means factoring in:

• State sales tax
  
• Title and registration fees
  
• Insurance premiums
  
• Inspection or emission costs
  

The bottom line? Buying a car in a “cheap” state could save you thousands over time—but only if you understand where those savings are coming from.

Top 5 Cheapest States to Buy a Car in 2025

If you’re serious about saving money on your next vehicle, knowing where to shop is just as important as what you buy. Whether you’re eyeing a brand-new SUV or a reliable used sedan, choosing the right state can make a big financial difference.

After digging through vehicle tax data, registration fee reports, and average insurance rates, here are the top 5 cheapest states to buy a car in 2025—with real reasons why they top the list.

 1. New Hampshire

Why it’s a winner:

• No sales tax on vehicle purchases
  
• Low title and registration fees
  
• No personal property tax on vehicles
  
• Affordable insurance rates
  

New Hampshire is often the go-to state for smart buyers looking to dodge extra fees. The lack of a sales tax alone can save you hundreds—or even thousands—right off the bat.

 2. Oregon

What makes it stand out:

• Zero state sales tax
  
• Reasonable registration fees
  
• Minimal dealer documentation charges
  

Oregon combines tax savings with a fair registration system, making it ideal for both in-state buyers and savvy out-of-state shoppers. Just be aware that its stricter emissions rules may apply if you’re registering locally.

 3. Florida

Why it’s worth considering:

• Large volume of car dealerships = better competition
  
• Competitive prices on both new and used vehicles
  
• Reasonable registration costs
  

Florida’s huge used car market—fueled by retirees, lease turn-ins, and a large population—creates plenty of room for negotiation. If you’re a good haggler, this is your playground.

4. Montana

Why it’s popular (especially for used cars):

• No sales tax statewide
  
• Low annual registration fees
  
• Loopholes allow out-of-state residents to form an LLC to register cars
  

Montana is a bit of a car-buying hack. Many out-of-state buyers form an LLC to legally register their vehicle there, avoiding sales tax entirely. Just make sure you’re following local laws—it’s not a loophole without paperwork.

 5. Delaware

Why it makes the list:

• No sales tax
  
• Low documentation and titling fees
  
• Smooth DMV process
  

Though smaller in size, Delaware packs a punch when it comes to savings. It’s a great choice if you’re in the Mid-Atlantic region and looking for a hassle-free, low-cost buying process.

Full Comparison Table: Car Buying Costs by State

Now that we’ve highlighted the top five cheapest states, you might be wondering—how do the other states compare? It’s not just about where you’ll save the most money, but where you’ll avoid overpaying in taxes, fees, and insurance over time.

To help you make a smart, informed choice, here’s a breakdown of average car buying costs across various states.

Key Cost Factors We Considered:

• State vehicle sales tax rate
  
• Registration and title fees
  
• Average auto insurance premiums
  
• Inspection and emissions requirements
  
• General cost of car ownership
  

This table gives a side-by-side look at the most impactful costs you’ll face when buying a car, new or used, depending on the state.

This snapshot makes it easy to compare your options based on more than just sales tax. Sometimes, a state with a slightly higher tax might still offer overall savings due to lower insurance rates or minimal registration fees.

If you’re planning to buy a car across state lines, this chart helps identify which states are worth traveling to—or even registering in—if it’s legally and logistically feasible for your situation.

Best States to Buy a Used Car

Used cars are often the smarter financial choice, but taxes and fees can still eat into your savings if you’re not careful. Fortunately, some states make used car buying far more affordable than others.

Here’s what to consider when you’re focused on finding the best state to buy a used car:

Why Buying Used Varies by State

• Sales tax on used vehicles may be lower or even nonexistent in certain states.
  
• Private party purchases might be taxed differently than dealership sales.
  
• States with milder climates tend to have used cars with less wear from rust, salt, or weather damage.
  
• Emissions and safety inspections can be more costly and frequent depending on local regulations.
  

Top States for Affordable Used Car Deals:

1. Montana – No sales tax, low registration, and no inspection requirements make it ideal for older vehicles.
   
2. New Hampshire – Offers all-around affordability with low fees and no taxes on used cars.
   
3. Florida – The large population and high turnover rate of vehicles mean better variety and negotiation power.
   
4. North Carolina – Offers reasonable used car taxes and relatively low insurance costs.
   
5. Arizona – Low registration fees and a dry climate make for well-maintained used vehicles.
   

Pro Tips for Buying a Used Car Out of State:

• Always get a vehicle history report from sources like Carfax or AutoCheck.
  
• Confirm emissions or inspection requirements in both the purchase and home states.
  
• Plan ahead for registration and title transfer costs.
  
• Don’t forget insurance—rates may change once you move the vehicle across state lines.
  

When done right, buying a used car in the right state could save you thousands—especially when paired with smart negotiation and a clear understanding of each state’s policies.

Hidden Fees You Should Watch Out For

It’s easy to get excited about a low sticker price—but the real cost of buying a car often lies in the fine print. Hidden fees can sneak up on you fast, especially if you’re purchasing in a state you’re unfamiliar with.

Let’s walk through the most common hidden charges that can turn a great deal into a costly surprise.

Common Hidden Fees When Buying a Car

1. Dealer Documentation Fees (Doc Fees)
   
   • These cover the cost of processing paperwork.
     
   • Some states cap doc fees (like California), while others don’t.
     
   • In states like Florida, doc fees can run upwards of $600 or more.
     
2. Advertising Fees
   
   • Some dealers pass their ad costs onto buyers.
     
   • These are negotiable, so don’t be afraid to question them.
     
3. Destination Charges
   
   • Often seen with new cars, these cover the cost of transporting the vehicle from the manufacturer.
     
   • They’re usually non-negotiable but should be disclosed upfront.
     
4. Vehicle Preparation Fees
   
   • Sometimes called delivery or inspection fees, these are tacked on before you receive the car.
     
   • Check your paperwork to see if it’s truly necessary or just dealer padding.
     
5. VIN Etching and Add-Ons
   
   • Dealers may include services like VIN etching, paint protection, or fabric sealants.
     
   • These are optional—so be sure you actually want them before paying.
     
6. Title and Registration Markups
   
   • Some dealerships add extra charges beyond the standard state fees.
     
   • Always confirm the exact amount with your state DMV beforehand.
     

How to Avoid These Hidden Costs

• Request a breakdown of all fees before signing anything
  
• Cross-check registration fees with your state’s DMV
  
• Negotiate or refuse optional add-ons you don’t need
  
• Bring your own financing, if possible, to avoid upsell tactics
  

Even in the cheapest state to buy a car, these extra costs can add up quickly. The more informed you are going in, the more confident—and cost-effective—your purchase will be.

Is It Worth Buying a Car Out of State?

Buying a car out of state can seem like a hassle, but under the right circumstances, it’s absolutely worth it. Whether you’re chasing better prices, avoiding high taxes, or seeking a specific make or model, there are real benefits to expanding your search beyond state lines.

Advantages of Buying a Car Out of State

• Lower purchase prices due to regional supply and demand
  
• No sales tax in certain states, saving you thousands
  
• Access to a broader selection, especially for used or specialty vehicles
  
• Opportunity to register in a state with lower fees, if you legally qualify
  

Challenges and Considerations

1. Registration and Title Transfers
   
   • You’ll need to transfer ownership in your home state, which may involve additional fees or inspections.
     
2. Sales Tax Obligations
   
   • Even if the state you buy from has no sales tax, your home state may still require you to pay it upon registration.
     
3. Emissions and Safety Standards
   
   • Some states have stricter vehicle requirements. Make sure your new car complies with your home state’s rules.
     
4. Travel and Transportation Costs
   
   • Whether you drive it back or ship it, factor in the cost of getting the vehicle home.
     
5. Out-of-State Financing Limits
   
   • Some lenders won’t finance cars bought from out-of-state dealerships. Check with your bank ahead of time.
     

When It Makes Sense to Buy Out of State

• You’re buying from a state with no sales tax (like Montana or New Hampshire)
  
• The same model is significantly cheaper elsewhere
  
• You’re looking for a specific trim, color, or rare model
  
• Your home state has higher fees or stricter inspection laws

Final Thoughts + Smart Buying Tips

Choosing the cheapest state to buy a car isn’t just about chasing the lowest sticker price—it’s about looking at the complete picture. From sales tax and registration fees to insurance rates and hidden dealer costs, every detail plays a role in what you actually spend.

The good news? With a little homework, you can save hundreds—or even thousands—just by adjusting where and how you buy.

Quick Recap: What to Look for in a Budget-Friendly State

• No or low sales tax on vehicles (like New Hampshire or Oregon)
  
• Reasonable registration and titling fees
  
• Affordable insurance rates
  
• Minimal dealership add-ons or hidden costs
  
• Clean used car inventory in states with dry, mild climates
  

Smart Buying Tips for Budget-Conscious Shoppers

1. Compare states before settling on a location
   Use cost comparison charts, local DMV sites, and dealership listings to evaluate where your money goes furthest.
   
2. Watch for hidden fees
   Always ask for a full fee breakdown—especially from out-of-state dealers.
   
3. Check local laws if registering out of state
   Some states allow you to buy and register elsewhere under certain conditions, but you must stay compliant.
   
4. Don’t skip the inspection and history report
   A cheaper price isn’t worth it if the car has major hidden issues.
   
5. Consider timing your purchase
   End-of-month, end-of-quarter, or holiday sales can make a good deal even better.
   
6. Shop in high-competition areas
   States like Florida or Texas have more dealerships and used inventory, which can drive prices down.

Final Word

No matter where you’re located, understanding the true cost of vehicle ownership puts you in control. When you combine smart location choices with careful research and negotiation, you’ll not only get a great car—you’ll drive away knowing you got the best possible deal.