Cheapest State to Buy a Car (2025) 3 days ago

Looking for a new or used car can feel like a juggling act—there’s the make, model, budget, and, of course, location. But did you know that buying your car in a different state might actually save you thousands of dollars?

In this guide, we’ll dive deep into the cheapest state to buy a car, explore which states impose fewer fees, and discuss how states with no sales tax on cars can help you keep more money in your pocket.

Whether you have been searching for the best state to buy a used car or you’re simply curious about the overall best state to buy a car, we’ve got you covered. Once you’ve made your purchase, Sherpa Auto Transport can help with smooth vehicle shipping, whether you’re moving your new ride across the country or bringing it home from a neighboring state.

Key Takeaways

• Different states, different costs: Tax rates, registration fees, and insurance premiums can all vary greatly, affecting the final price of your car.
• Avoid hidden fees: Some states tack on extra charges for paperwork or environmental fees, which can catch you off guard.
• Shipping is an option: You don’t have to drive your new car all the way home. With the right auto transport partner, you can buy in one state and have it delivered to your door.
• Sales tax matters: Checking out states with no sales tax on cars might save you a significant amount of money, especially if you’re buying a higher-priced vehicle.

In This Guide:

• Best State for Initial Car Cost – Oklahoma
• Best State for Reduction of Fees – New Hampshire
• Worst State for Initial Car Costs – California
• Worst State for Unexpected Fees – Hawaii
• States without Sales Tax – New Hampshire, Oregon, Montana
• Best State for Auto Insurance – Maine
• Best State to Buy a Car Overall – Iowa
• Do Your Research to Find the Cheapest State to Buy a Car
• Cheapest State to Buy a Car From FAQs

Best State for Initial Car Cost – Oklahoma

If you’re strictly interested in the cheapest state to buy a car based on the upfront price tag, states with lower dealership markups and competitive market conditions come out on top. In particular, states like Oklahoma often feature lower overall vehicle prices due to lower overhead for dealerships and milder weather, resulting in less wear and tear.

Additionally, some southwestern and midwestern states often feature lower overall vehicle prices due to lower overhead for dealerships and milder weather conditions that minimize wear and tear.

These areas tend to have lower dealership overhead, allowing sellers to offer more competitive pricing. Combine that with a highly competitive market, and you’ll often see dealers vying for buyers, which can drive down costs even further.

On top of that, the local climate in many of these regions helps keep cars in better condition, so you’ll find a wide selection of well-maintained vehicles that still come at budget-friendly prices.

Tip: Once you’ve pinpointed a car you love in another state, remember you can ship it back home with Sherpa Auto Transport. This way, you enjoy local deals without the hassle of a long drive.

Best State for Reduction of Fees – New Hampshire

Beyond the initial sticker price, fees such as sales tax, registration, and title fees can quickly add to the total cost. Some states offer lower registration fees and minimal documentation charges, helping you save in the long run. One standout is New Hampshire, known for its low registration costs and lack of general sales tax, which can minimize total expenses significantly.

When evaluating states for reduced fees, focus on whether they offer lower or flat-rate registration costs rather than fees that increase with your vehicle’s value. Some states also keep administrative expenses minimal, avoiding the sticker shock of inflated paperwork charges.

And don’t forget to check if they impose property or excise taxes based on your car’s market value—these yearly assessments can quickly add up and affect your overall savings.

Pro Tip: Even if you find the best state to buy used cars based on fees, don’t forget the costs of traveling there and potential shipping expenses. Balancing all these factors helps you figure out where you truly save the most.

Worst State for Initial Car Costs – California

Some states are notorious for high dealership markups and strong demand, leading to higher initial prices. These regions may also have additional local requirements, environmental fees, or city taxes that increase the overall cost. For example, California often has higher base prices thanks to a large market with strong demand and extra emissions regulations.

These states often include large urban centers where both used and new cars are in high demand, naturally driving up prices. On top of that, buyers can face “urban surcharges” or local fees, added to cover everything from congestion to environmental costs.

And because there’s less dealership competition in certain cities, fewer players are fighting for your business, which can further inflate the price you’ll end up paying.

If you live in one of these pricier regions, it might still be worth shopping elsewhere for a better deal. Sherpa Auto Transport can guide you through the online purchase process, so you can snag a better price out of state.

Worst State for Unexpected Fees – Hawaii

Fees can show up in surprising ways. Some states add small charges that, when combined, lead to big surprises. For instance, you might see emissions testing, environmental impact fees, or “luxury” surcharges for higher-valued vehicles.

A prime example is Hawaii, where additional shipping and inspection fees can significantly bump up your total costs, especially for imported vehicles.

Many states impose environmental taxes to cover stricter emissions regulations, which can quickly add to your bill. You may also encounter local or city-based surcharges that hike up the overall cost without much warning. On top of that, documentation fees can range widely—some states permit higher maximum charges, resulting in a sizable addition to your final invoice.

Before you finalize your purchase, always ask the dealership for a detailed fee breakdown. This extra step helps you avoid nasty surprises at the end of the transaction.

States without Sales Tax – New Hampshire, Oregon, Montana

Living in or buying from states with no sales tax on cars is a huge advantage if you want to minimize the final bill. States like New Hampshire, Oregon, Montana, Delaware, and Alaska traditionally stand out here. But, as with everything, there are a few catches:

Even if a state doesn’t impose sales tax on cars, keep an eye out for other fees they might tack on to offset that lost revenue. Also, many states have residency rules that prevent non-residents from sidestepping taxes completely, so you can’t always pop in, grab a car, and skip out on taxes.

Lastly, remember that if you return home with the vehicle, your own state’s sales tax could still come into play, unless you qualify for a specific exemption.

If you are considering whether driving your new car home or shipping it home is the better deal, check out Sherpa’s guide on how to ship a car to another state.

Best State for Auto Insurance – Maine

While auto insurance doesn’t affect your initial purchase cost, it absolutely affects your total cost of ownership. Certain states have lower average insurance premiums, meaning you’ll spend less over time. For instance, Maine consistently ranks among the states with the lowest auto insurance costs, helped by relatively low accident rates and fewer overall claims.

Some states see fewer accidents and claims, which translates to lower premiums because insurers don’t have to factor in as many payouts. Additionally, less congested areas often mean reduced traffic and lower risks, so insurance companies can keep their rates down

Lastly, certain state regulations cap how much premiums can climb, further limiting the potential for insurance cost increases.

After you find the best state to buy a car, it’s worth checking average insurance premiums there. If it’s significantly lower, you might save even more in the long haul.

Best State to Buy a Car Overall – Iowa

Putting it all together—sales tax, dealership markups, fees, and insurance—some states simply emerge as the best states to buy a car overall. They balance low purchase prices with fewer fees, moderate insurance premiums, and an environment that maintains vehicle quality.

Iowa often features competitive dealership pricing, modest fees, and lower-than-average insurance premiums, making it a top option for many buyers.

Additionally, many southwestern or midwestern states often fit this description. But your personal situation matters too: if you need to factor in transportation or shipping costs, it might negate the savings. For guidance on shipping from anywhere in the U.S., Sherpa Auto Transport’s Shipping A Car Cross Country guide can help you budget for that extra step.

Do Your Research to Find the Cheapest State to Buy a Car

No single state is perfect for everyone, but doing a bit of research on fees, taxes, and average dealership prices can help you find the cheapest state to buy a car that fits your specific situation. Whether you’re hunting for the best state to buy a used car, exploring states with no sales tax on cars, or simply wanting a quick transaction with minimal fees, knowledge is power.

And remember—if you need help getting your newly purchased vehicle to your home, Sherpa Auto Transport is ready to simplify the journey.

Cheapest State to Buy a Car From FAQs