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Best States to Buy a Car : The Ultimate Guide

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When you buy a used car, there’s more to it than just the sticker price. Prices and total costs of cars vary by state because of taxes, registration fees, dealer fees, and more. No matter how good you are at negotiating, prices vary greatly from one state to the next. Keep reading to know about the best states to buy a car.

best states to buy a car

Best state to buy a car for initial cost: Florida

Vehicles in Florida are approximately 10% less expensive than the national average. Despite slightly higher sales tax and registration fees than most other states, the overall savings help Florida rank as one of the best states to buy a car. The low initial costs in Florida are due to several factors. For starters, Florida has a fairly large elderly population. 20.5% of Florida’s population is over the age of 65. As they drive less, they begin to sell their cars, giving others more opportunities to find a great deal.
Wealthier residents of Florida frequently trade in their cars for more modern models. This also creates a market for affordable high-end automobiles. Plus, most cars in Florida are probably in excellent condition because they haven’t been constantly exposed to the wear and tear of snow or the salt used on roads in the winter.

Worst state for initial cost: California

Compared to Florida, California has many factors that make car buying a risky business. The general cost of living in California is quite high and has been steadily rising for many years. Furthermore, unemployment is a problem in the state, making financially disadvantaged people more common. As a result, many people are clinging to their vehicles.
People are more hesitant to sell their cars, so fewer are available on the market. Used cars will always be less expensive, but the benefits will be less noticeable with fewer used cars to choose from. Finding a suitable used car in California is frequently a matter of luck, as competition for them becomes increasingly fierce. It becomes quite expensive when you factor in the annual car insurance premium of around $2,100.

Best state to buy a car unexpected fees: Oregon

If you’re looking to buy a car in Oregon, you’re in luck because the maximum processing fee is around $130 or less if the dealer does not use an integrator. Fees are also low in Alaska and New Hampshire, with fees of only a few hundred dollars. However, some states have hefty fees that can completely wipe out your budget.

Worst state for unexpected fees: Alabama

It is better to avoid Alabama if you don’t want to end up paying unexpected fees. When purchasing a new or used vehicle in this state, buyers pay an average of around $2,300 or more in total fees. Fortunately, Alabama has the lowest average gas price in the country. Arizona, Colorado, and Tennessee fees are also around the same range.

States without sales tax

A single-digit sales tax may seem less trouble, but when purchasing something worth thousands of dollars, such as a vehicle, sales tax can be a significant burden. Having no sales tax can help you save a lot of money on your car upfront. The state sales tax is only one part of the equation, though.

38 states have a local sales tax on top of their state tax. Each of these taxes is different depending on where they are. In some places, the local sales tax rates are related to the state tax in a way that doesn’t make the total sales tax go up or down. A state’s sales tax rate could be higher, but local sales taxes could be low, making the total tax rate more balanced and easier to deal with.

States with no sales tax: Alaska; Delaware; Montana; New Hampshire; Oregon.

States with the lowest average combined sales tax rates are Colorado (2.9%), Hawaii (4.44%); Wyoming (5.33%); Wisconsin (5.43%), and Maine (5.50%).

States with highest average combined sales tax rates are Tennessee (9.55%); Louisiana (9.52%); Arkansas (9.51%); Washington (9.23%) and Alabama (9.22%).

Best state for auto insurance: Maine

Most states have laws that say you have to have car insurance. However, rates vary based on where you live and what make and model of the car you have, so insurance is important to consider when buying a car.
There’s no better place than Maine to get cheap insurance as it is hundreds of dollars less than the national average of $1,557. So you’ll only have to pay around $860 or more per year for a policy that gives you good coverage.

Insurance is also cheap in Ohio and Idaho, where the same amount of coverage costs less than $1000 per year. The most expensive car insurance is in Michigan.

The cheapest states for auto insurance costs are Maine, New Hampshire, Ohio, Virginia, and Wisconsin.

Best state for auto refinance: Hawaii

The average amount saved when refinancing a car changes from state to state. Refinancing can be a good idea if your credit score has improved or your interest rate has gone down since you got your auto loan. In these situations, you’re more likely to be eligible for a lower rate.

After refinancing, borrowers across the country saved an average of around $1,160 per year, 16% more than in 2020. And the average drop in interest rates was around 7%, the most since 2013.

Hawaii is the best state for auto refinance, with an average auto refinance savings of around $1,480 annually. Alaska, Nevada, Louisiana, California, and Wyoming are the next on the list.

Best and worst states to buy used cars

The average price of a used car is about 35% higher than in 2021. Still, some markets are cheaper than others. So if you want to save money on the initial price of a used car, you might want to look outside of your state. But remember that if you buy a car from out of state, you may have to pay for shipping and additional registration fees.

Best states to buy used cars based on last year’s statistics are Indiana, Ohio; Connecticut; Virginia; Kentucky.

Based on last year’s statistics, the worst states to buy used cars are Alaska, Wyoming, Montana, Arkansas, and Idaho.

Best states to buy a car for low car fees

Even if you and the dealer agree on a final price, you may still have to pay extra fees. For example, you usually can’t negotiate dealer documentation fees, which help cover the administrative costs of selling a car.

Some states limit how much dealers can charge for paperwork fees, but most do not. For example, Alaska has no limit on how much a dealer can charge for paperwork fees, but the fee must be added to the price of the car. Based on the statistics, California, Oregon, New York, Minnesota, and South Dakota are the top five states with the lowest car fees.

Overall best state to buy a car: New Hampshire

New Hampshire is the best state to buy a car in general. When you buy a car in New Hampshire, you don’t have to pay too many extra fees. You can save money upfront because there are no state sales taxes, and the registration fees are low. The insurance premiums in the state are also pretty low. The average cost of having a car in New Hampshire is about $2,691 per year.

best state to buy a car

Is buying a car out of state the cheapest option?

Buying a car can be cheaper in some states and more expensive in others. Because of this, it’s important to do your research before buying something out of state. For example, if you’re looking for a specific make and model or a rare car, you might have to go to another state. Or, if you’re considering moving to a state with lower taxes or fees soon, you might want to put off buying a car to save some money.

In general, you might not save much by shopping out of state. For example, you might save money upfront if you buy a car in a state where prices are lower. Still, you might end up spending the same amount or more than you would at home because of things like sales taxes, out-of-state registration fees, or getting the car to pass local inspections and emissions tests.


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