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 fact, some states offer significantly lower fees and taxes compared to most other states, making them stand out as more budget-friendly options for car buyers.
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. We’ll also help you identify affordable places and the cheapest states to buy a car, so you can make the most cost-effective decision.
Whether you have been searching for the best state to buy a used car, looking for an affordable state for your next car purchase, 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. With car prices reaching record highs in 2025, it’s more important than ever to seek out the cheapest states and maximize your savings.
Key Takeaways
- Different states, different costs: Tax rates, registration fees, and insurance premiums can all vary greatly across most states, 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. These additional costs may include unexpected fees beyond the sticker price, such as documentation fees or state-specific surcharges.
- 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. Car purchases can be more affordable in certain states due to differences in taxes, fees, and other state-specific costs.
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
- Tips for Buying a Car
- How to Find the Cheapest State to Buy a Car
- Cheapest State to Buy a Car 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. Oklahoma is consistently ranked among the cheapest states for initial car costs, with prices and fees often well below the national average.
Additionally, some southwestern and midwestern states often feature lower overall vehicle prices due to low fees, such as reduced registration and sales tax, and milder weather conditions that minimize wear and tear.
The five states most often considered the most affordable for car purchases are Oklahoma, Florida, New Hampshire, North Carolina, and Ohio. 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.
Used car sales and car sales in these states are especially active and affordable, thanks to favorable market conditions and a large supply of well-maintained vehicles. 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 fees and the lowest unexpected fees compared to most other states. New Hampshire is also one our top states to live in 2025 when considering things such as cost of living, quality of life and safety.
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. New Hampshire’s lack of state sales tax is a key factor in its affordability. 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. If you purchase a car out of state, you may still need to pay your own state’s taxes when registering the vehicle at home.
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 expensive states may also have additional local requirements, environmental fees, or city taxes that increase the overall cost. For example, California is considered an expensive state and is one of the most expensive states for car buyers, often having higher base prices thanks to a large market with strong demand and extra emissions regulations.
These expensive states often include major cities and large urban centers where both used and new cars are in high demand, naturally driving up prices. In major cities, prices and fees can be even higher. On top of that, buyers can face “urban surcharges” or local fees, added to cover everything from congestion to environmental costs.
A high sales tax is another key factor that makes these expensive states less attractive for car purchases. 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 and significant additional costs for car buyers. 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. These unexpected fees make Hawaii stand out compared to states with the lowest unexpected fees.
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 state 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, and are often considered affordable states for car buyers due to their tax advantages. However, as with everything, there are a few catches.
Even if a state doesn’t impose state 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.
If you’re buying from a dealership or private seller in another state, you may need temporary registration to legally drive your new car home or complete the registration process while waiting for your permanent plates. 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. For instance, Maine consistently ranks among the states with the lowest auto insurance costs, helped by relatively low accident rates and fewer overall claims. However, not all states have the same insurance rates; some are much higher or lower than the national average.
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
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 both vehicle ownership and car ownership more affordable compared to other states. Iowa is consistently ranked among the most affordable states for buying and owning a car.
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.
Tips for Buying a Car
To get the best value on your next car purchase, it pays to be proactive and informed. Start by comparing prices in different states and researching the market to spot the best deals. Consider buying a used vehicle, as the average price is often much lower than a new model, and depreciation is less of a concern. Look for states with low sales tax and registration fees to further reduce your total cost. Don’t forget to factor in dealer fees, documentation fees, and any other unexpected costs that might pop up. Tools like Kelley Blue Book can help you determine the average price for the car you want, so you know if you’re getting a fair deal. By following these tips and doing your homework, you can save big on your next car purchase and drive away confident that you made a smart financial decision.
How 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. Make sure to research the cheapest states to buy a new or used vehicle, as factors like sales tax and dealer fees can greatly affect your final price. And remember: where you buy your car matters for your total cost. 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 FAQs
Is it cheaper to go to another state to buy a car?
Sometimes it is, especially if you live in a high-cost state or you want to take advantage of a lower sales tax or better dealership offers. Buying in an affordable state can save you money on fees and taxes, but you may still need to pay your own state’s taxes when registering the vehicle. Just remember to factor in travel or shipping costs, so you get a true sense of your total expense.
What is the downside of buying a car out of state?
You might face additional paperwork or inspections, and you may need a temporary registration to legally drive the car home while completing the full registration process. Also, registering an out-of-state vehicle can be trickier, and you’ll need to ensure you comply with both local and destination state regulations. Be aware that there could be additional costs for inspections, temporary registration, or required paperwork.
How can I ship a car from another state?
Using a reliable carrier like Sherpa Auto Transport takes the stress out of the process. Check out How to Ship a Car for step-by-step details. Typically, you’ll schedule a pickup, arrange the route, and receive an estimated delivery window.
What is the cheapest way to get a car to another state?
Open carrier transport is often the most budget-friendly option, as enclosed carriers cost more. If your schedule is flexible, you might also find discounts. Learn more about shipping cars cross country for tips on saving money.
