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The 18 Cheapest States to Buy a Car

New Hampshire

Next to owning a home or paying for college, a car is the most expensive purchase you can make. Many factors determine the total cost you will pay for a new or used car, including sales tax, registration fees, insurance premiums, and where to buy the car. Shopping for a car out of state may cost you less than in your home state. But which states should you look into? Below are 18 cheapest states to buy a car in 2022.


18. Wisconsin

Actually, Wisconsin is an excellent spot to purchase a brand-new automobile or truck. The state has many dealerships, all eager to make an effort to get you the finest bargain possible. Wisconsin's annual averages for minimum and full coverages are $332 and $1,186, respectively, which are much lower than the respective national averages of $565 and $1,674 for the same coverage levels. In Wisconsin, the state sales tax is fixed at 5% of the MSRP. The additional sales tax that counties are free to impose on top of this sum ranges from 0.01 percent to 0.06 percent. Eight counties impose no additional fees at all.

North Carolina

17. North Carolina

In this state, there’s a state-wide 3 percent sales tax. The registration and sales-related fees are also relatively low for new cars. Also, the auto insurance premiums are the seventh lowest in the country. In North Carolina, you can bargain to scrap off dealership fees depending on the car dealership you shop at. North Carolina has multiple car dealerships due to its high purchasing power. It is a no-brainer that the more the dealerships, the better your chances of getting affordable car deals. Remember to carry cash in North Carolina dealerships, as some don't accept checks.

New York

16. New York

New York breaks into this list owing to its 4 percent sales tax which is among the lowest sales tax rate in states with a tax policy. While you may not get the cheapest Bentley in New York, tons of dealerships are willing to lower the price to make sales. After all, New York is a business hub, and the competition is cutthroat. Depending on which county and city you shop for a car in, New York, you may end up paying nominal dealership fees. New York is one of those states you really have to do your research on a dealership before walking in to buy a car.


15. Missouri

Missouri blends multiple factors into lowering the cost of vehicle purchases. The state has bottom-rate unexpected fees, low transportation costs, and registration fees. The insurance premiums are affordable as well. While Missouri doesn’t have the cheapest initial upfront fees, the low sales tax and documentation fees will lower your total cost. Saving on upfront fees may be appealing; however, expensive documentation fees may drive up costs. According to Witch Clutch, some states with expensive documentation fees include Arizona and Tennessee. However, documentation fees may save you a trip to the DMV to register your new automobile. If you buy a car manufactured in Missouri, like the Ford F-150, the sticker price is less than in other states. Lower sticker prices are one of Missouri's few unknown perks when shopping for affordable cars.


14. Pennsylvania

New car dealers in Pennsylvania will happily file the registration and title paperwork for you. However, you will still be required to visit the Department of Transportation and pay the accompanying fees. In the DOT, cash and credit cards don't apply; only checks or money orders do. Pennsylvania charges $36 to register a passenger car, while some older citizens may be eligible for a discount of just $10.00. The cost of a new title is $22.50. The state imposes a 6 percent tax on purchasing new vehicles, while some counties raise the total sales tax to as much as 8 percent.


13. Ohio

Ohio relies on its demographics to keep costs low. The state is the seventh most populous state in America. Generally, in high-population states, the sticker price is lower than the MSRP to appeal to the vast swath of the market. Insurance premiums are the second lowest in the country, and the gas prices are lower. Ohio residents also enjoy great deals on used cars. The primary reason is that Ohio has a varied demographic base, meaning you can find cars with low mileage at competitive prices or cars with higher mileage that you intend to use for a year or two or to lease.


12. Wyoming

State tax in Wyoming is 4 percent, but individual counties are free to add up to an additional 3 percent on top of this amount. Insurance is one of the major factors influencing car ownership prices, and just as Wyoming's overall cost of ownership is higher than the national average, so are insurance premiums. The average annual insurance price is even lower for a single, 40-year-old guy in the state with a clean driving record and good credit. To get you to purchase a new automobile from them, dealerships frequently run promotions where you can trade in your old car for credits. This is due to Wyoming not taxing your car's trade-in value, so you only have to pay sales tax on the entire cost of the transaction.


11. Michigan

Top-selling, mid-priced vehicles are compared across six expense categories: fuel, license/registration/taxes, insurance, maintenance/repair/tire expenses, and depreciation. Depreciation is still the single-largest cost of owning a new car. Depending on the owner's birthday and the time of the purchase, the cost is prorated. The 6% state sales tax in Michigan is charged at the time of purchase.


10. Colorado

There is a state sales tax in Colorado when a vehicle is bought. State sales tax equals 2.9% of the purchase price and applies to all buyers. If the car comes from a Colorado dealer, the dealer will be responsible for collecting and paying the state sales tax. The vehicle title work comes with a receipt for the paid state sales tax.


9. Hawaii

All necessary documents and fees are included in the buying process by Hawaiian auto dealers, and they are then added to the final price you pay for your new car or truck. Calculating fees might be challenging because there is no state-wide department of motor vehicles, and each county manages its vehicle registration. Hawaii doesn't have a state tax; instead, it has an excise tax system that applies to commercial sales.

Customers of retail businesses are charged a 4 percent fee, plus an additional 0.5 percent tax by Honolulu County. In addition, a 0.5 percent wholesale tax is added on top of the other taxes, bringing the overall tax rate on a car purchase, depending on where you live, to between 4.166 percent and 4.712 percent, as World Population Review notes.


8. Virginia

In Virginia, the upfront fees for purchasing a vehicle are $1352 for a one-time transaction and $2750 for lower annual ownership and usage charges. Virginia levies a motor vehicle sales and use (SUT) tax of 4.15% based on the car's gross sales price. To collect the motor vehicle sales and use tax, the dealer's processing charge is included in the gross sales price. After manufacturer incentives or rebates, the vehicle price is known as the "gross sales price." Other price reductions, such as credit for trade-ins, unpaid liens, or other unpaid credits, are not included in the gross sales price.

South Dakota

7. South Dakota

South Dakota auto dealers will be able to handle the actual filing of your registration and titling documents for you, leaving you to pay the fees that are included in the price of your vehicle. The weight of the particular passenger automobile or pickup truck determines the registration fees. On the MSRP of each brand-new car or truck, the state of South Dakota levies a 3 percent excise tax. This takes the place of the regular sales tax. Additionally, there is a $5 titling charge.


6. Maine

In Maine, car dealerships frequently handle the registration paperwork for you and then transport it to the required government authorities. The registration cost will vary according to the license plate you select, with a normal passenger plate costing $35.00 as a starting point. As well as that, you must pay a $33 title application charge. All car purchases in Maine are subject to a 5% sales tax. You will also be required to pay an excise tax to your municipality of residence, which depends on the MSRP of the automobile or truck, in addition to the state tax. The rate for a brand-new car is 2.4 percent.


5. Oregon

Have you ever stepped into a dealership with the best negotiation skills, only to have the final price wiped off your budget? It happens to the best of us – negotiators. While you may drive down the MSRP, the unexpected fees may quickly wipe you out of your budget. Unexpected fees may come in the form of service fees, registration fees, and more. According to, Oregon has the lowest unexpected fees meaning you will buy a car within your budget despite the unexpected fees. However, it is good practice to carry extra cash even when shopping for a car in Oregon. Dealerships may charge you "convenience fees" and other hidden fees you won't like.


4. Maryland

Maryland new car dealers are more than pleased to relieve you of much of the paperwork stress by guiding you through the process, explaining what forms to sign and where to file them with the appropriate state agencies. They will aid you in processing some of the required fees as well. Maryland requires that registration be paid in increments of two years based on the class and weight of the particular vehicle. All new car purchases are furthermore subject to a $50 title fee. In addition to the fees mentioned above, Maryland imposes a 6 percent excise tax depending on the vehicle's value on all new car and truck purchases.


3. Florida

While some states, such as New Hampshire, have low registration fees that keep a car purchase within reasonable prices, Florida has a different aspect that makes it a state worth checking out when car shopping. The primary reason is Florida's demographics. Florida's 20.5% population is over the age of 65, meaning the chances of snagging up a relatively inexpensive used car are high.

Also, the state is car-heavy and has a higher purchase rate, meaning car dealerships keep prices within the MSRP range to attract customers. The different factors that factor into a car's total cost, such as fees and tax, are also relatively low but not the lowest in the country. Florida is the benchmark for car affordability for both new and used cars, especially if you are looking to explore everything from hybrid cars to supercars.


2. Alaska

Generally, you want to shop for a car in a state with no sales tax. Alaska has a state-wide no sales tax, meaning you will pay less for a car's total cost. It is important to note that Alaska does not have a legal limit on the fees a dealer can charge. An unscrupulous dealership may bump up fees to accommodate the no-tax policy. Financing options are also more flexible in Alaska than in other states owing to its average income rate and better loan security.

New Hampshire

1. New Hampshire

New Hampshire is the cheapest state to buy a car in 2022. However, it is not cheap because of the upfront cost but rather the state's tax policy. New Hampshire has a no-tax policy on buying cars, lowering your car purchase cost. Also, the registration fees, and insurance premiums are relatively low compared to the national average. Car owners in New Hampshire pay an average of $870 in premiums.

However, the cost varies depending on your driving history, type of coverage, and other inherent factors like the car's value. When considering all the costs, New Hampshire may be your best bet to get a car at bottom-rung prices. Usually, as a buyer, you have researched and determined the car you want or have the MSRP in mind. Additional fees associated with purchasing a car usually drive up the cost, which is what you want to avoid or keep on low.

Dana Hanson

Written by Dana Hanson

Dana has extensive professional writing experience including technical and report writing, informational articles, persuasive articles, contrast and comparison, grant applications, and advertisement. She also enjoys creative writing, content writing on nearly any topic (particularly business and lifestyle), because as a lifelong learner, she loves to do research and possess a high skill level in this area. Her academic degrees include AA social Sci/BA English/MEd Adult Ed & Community & Human Resource Development and ABD in PhD studies in Indust & Org Psychology.

Read more posts by Dana Hanson

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