Cheapest States to Buy a Car (2025 Guide)

Looking for a new or used car can feel like a juggling act. There’s the make, model, budget, and, of course, location. You may be surprised to know that buying your car in a different state might actually save you thousands of dollars.

According to the Bureau of Transportation Statistics (BTS), the average cost of owning and operating an automobile (assuming 15,000 miles per year) crossed $12,000 in 2024. Since car ownership expenses continue to rise, finding the cheapest state to buy a car will cut costs like purchasing your vehicle in a more affordable state can make a big difference.

In this guide, we’ll explore the cheapest states to buy a car, review which states impose fewer fees, and highlight states with no sales tax on vehicles. Whether you’re searching for the best state to buy a used car, comparing options for your next new vehicle, or simply curious about where you can get the best deal, we’ve got you covered. Once you’ve made your purchase, Sherpa Auto Transport can help with smooth vehicle shipping.

Key Takeaways

• Different states have different costs that affect the final price of your car.
• Some states have extra charges for paperwork or environmental fees, try to avoid them.
• You don’t have to drive your new car all the way home, you always have the option to ship.
• Checking out states with no sales tax on cars might save you a significant amount of money.

In This Guide:

• Cheapest States to Buy a Car (2025 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

Cheapest States to Buy a Car (2025 Guide)

When it comes to finding the cheapest state to buy a car, several factors come into play that include dealership markups, sales taxes, registration fees and even local weather. Some states simply make car ownership more affordable thanks to lower costs across the board. Below, we have rounded up the top states that offer the best deals in 2025, so you can make a smart, budget-friendly decision before hitting the road.

Best State for Initial Car Cost – Oklahoma

If you’re looking for the cheapest state to buy a car based purely on upfront cost, Oklahoma consistently ranks at the top thanks to its lower dealership markups and competitive market conditions. Several southwestern and midwestern states, including Florida, New Hampshire, North Carolina, and Ohio, also stand out for their affordability. These regions tend to have lower registration fees, sales taxes, and overall dealership overhead, which allows sellers to offer vehicles at prices well below the national average.

Also, used and new car markets in these states are especially active. This offers buyers a wide selection of well-maintained vehicles at budget-friendly prices. The milder weather in many of these areas also helps preserve vehicle condition, further increasing value for buyers. Once you have found the perfect car in another state, you can easily have your car shipped home with Sherpa Auto Transport. This saves time and avoids the hassle of a long-distance drive.

Best State for Reduction of Fees – New Hampshire

Going beyond the initial sticker price, fees such as sales tax, registration, and title fees can add to the total cost. Some states offer lower registration fees and minimal documentation charges. For instance, New Hampshire is 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.

Moreover, when you are evaluating states for reduced fees, you need to focus on whether they offer lower or flat-rate registration costs. 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. Also, keep a check on 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. 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 known for high dealership markups, strong demand, and added local costs, making them more expensive places to buy a car. California, for instance, consistently ranks among the priciest due to its large market, strict emissions regulations, and high base prices.

In addition, some cities impose environmental or local taxes that further drive up vehicle costs. Major urban centers tend to experience higher demand for both new and used cars, which naturally pushes prices upward. Sometimes “urban surcharges” are added to cover congestion and environmental fees.

Another major contributor to high car prices in these states is the sales tax rate. With fewer dealerships and less competition in certain areas, buyers often end up paying more just because there are fewer sellers competing for their business. If you live in one of these high-cost regions, it may be smarter to shop for your car in another state where prices are lower. Once you have found a better deal, Sherpa Auto Transport can handle the shipping, making it easy to bring your new ride home without breaking the bank.

Worst State for Unexpected Fees – Hawaii

Fees can show up in unexpected 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. Hawaii is a prime example, where additional shipping and inspection fees can significantly bump up your total costs, especially for imported vehicles. 

Moreover, many states impose environmental taxes to cover stricter emissions regulations, which can quickly add to your bill. You may 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 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 as affordable states for car buyers due to their tax advantages.

However, even if a state doesn’t impose state sales tax on cars, keep an eye out for other fees. 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.

Furthermore, 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 thinking 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. It has 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 have fewer accidents and insurance claims, which helps keep premiums low since insurers don’t need to cover as many payouts. Areas with lighter traffic also mean lower risk, so rates stay more affordable. Once you find the best state to buy a car, check the average insurance costs there. If they are lower, you could save even more over time.

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.

For instance, Iowa often features competitive dealership pricing, modest fees, and lower-than-average insurance premiums which makes the 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., have a look at Sherpa Auto Transport’s Shipping A Car Cross Country guide to budget for that extra step.

Tips for Buying a Car

To get the best deal on your next car, it helps to plan ahead and do some research. Compare prices in different states and check the market to find where cars cost less. Buying a used car can also save you money since it costs less and doesn’t lose value as quickly.

Look for states with low sales tax and registration fees, and keep an eye out for extra charges like dealer or paperwork fees. You can use tools like Kelley Blue Book to check the average price of the car you want and make sure you are paying a fair amount. Doing a little research can help you save money and feel confident about your purchase.

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. When you are searching for the cheapest place to buy a car, make sure you factor in sales tax and dealer fees that can greatly affect your final price.

And remember: where you buy your car has an impact on 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