Where To Find the Cheapest States to Buy a Car: 2023 Data Guide

Finding the best deal when purchasing a vehicle requires more than just comparing dealership offers—your geographic location plays a surprisingly significant role in the final cost. Beyond the $48,451 average price tag for a new car, several factors vary dramatically from state to state, potentially saving or costing you thousands of dollars. Understanding which states offer the most budget-friendly conditions for car buyers can help guide your purchasing decision.

Research from GOBankingRates analyzed multiple cost factors across all states to identify which regions allow consumers to find the cheapest states to buy a car. The analysis examined data from August 2023, incorporating information from trusted sources including Kelley Blue Book, ISeeCars, AARP, and LendingTree to establish a comprehensive ranking.

How State Taxes and Dealer Fees Impact Your Final Price

The total cost of vehicle ownership depends on three interconnected variables: the base price of the vehicle itself, the state’s sales tax rate, and dealer fees charged during the transaction. While vehicle prices fluctuate based on market conditions, sales tax rates remain stable by state—ranging from zero in several states to over 7% in others. Dealer fees add another layer of variation, sometimes reaching thousands of dollars depending on location.

When comparing states for car affordability, no single factor tells the complete story. A state with high vehicle prices might compensate with minimal sales taxes. Conversely, moderate car prices combined with reasonable dealer fees can position a state as genuinely affordable overall. The ranking considered all these elements equally to determine which regions offer the most advantageous conditions for buyers.

The Most Affordable States Ranked by Total Cost

#10: North Carolina offers moderate affordability despite a 7.00% sales tax. New vehicle prices averaged $50,100 with dealer fees of $1,996, while used cars averaged $27,558 with $1,623 in fees. Prices run roughly 3.4% above the national average, but competitive dealer fees help balance the equation.

#9: New Mexico ranked ninth with new car prices at $50,770 and used cars at $27,926. Though the state carries the 16th-highest sales tax rate nationally at 7.61%, vehicle prices remain only 4.79% above average and dealer fees stay reasonable at $1,603 for new and $1,230 for used vehicles.

#8: Wisconsin features a moderate 5.43% sales tax with new car prices of $49,080 and used prices at $26,997. While dealer fees rank highest in the top ten at $2,753 for new and $2,069 for used vehicles, they remain affordable nationally. Car prices hover just 1.30% above the national average.

#7: Virginia combines a 5.77% sales tax with car prices remarkably close to national averages at only 0.42% above. New vehicles averaged $48,656 and used at $26,764, with dealer fees comfortably below national standards despite new car fees reaching $2,486.

#6: Hawaii surprises with new car prices at $46,718—actually 3.58% below the national average—plus used vehicles at $25,698. The 4.44% sales tax and four-digit dealer fees help keep this island state competitive for buyers.

#5: Delaware stands out as one of just four states charging zero sales tax on vehicle purchases, making it inherently attractive. New vehicles averaged $47,502 with used at $26,129, representing roughly 2% below the national average. However, relatively high dealer fees at $2,486 for both new and used vehicles prevent the state from ranking higher.

#4: Alaska compensates for sky-high vehicle prices—new cars averaged $58,377 and used at $32,111, over 20% above national averages—with the nation’s lowest dealer fees at just $315 for both categories. This unique combination allows the state to maintain competitive overall affordability.

#3: New Hampshire offers excellent value with zero sales tax, new car prices of $45,928, and used prices at $25,263. Vehicle prices rank among the nation’s lowest at 5.21% below average. Dealer fees reach $1,372 but remain well below national norms, creating substantial savings for buyers.

#2: Montana benefits from zero sales tax combined with the third-lowest dealer fees nationally at just $537 for both new and used vehicles. Despite vehicle prices running 15% above the national average at $56,186 for new and $30,906 for used, the tax-free status and minimal dealer charges make this state highly attractive.

#1: Oregon tops the list for overall affordability, offering zero sales tax plus the second-lowest dealer fees in the country at $353. New vehicle prices averaged $51,299 and used at $28,218. The combination of eliminating sales tax entirely while maintaining minimal transaction costs creates the most favorable buying environment.

Key Takeaways for Smart Car Buyers

The difference between the most and least affordable states can easily exceed several thousand dollars when purchasing either new or used vehicles. Interestingly, states don’t necessarily rank consistently across categories—some offer low vehicle prices but higher taxes, while others balance moderate prices with minimal fees.

Buyers considering a move, or those near state borders, might benefit significantly from understanding these cost differentials. The analysis, based on 2023 data, provides a reference framework for understanding regional cost variations, though current market conditions may differ from these historical figures. For the most current pricing in your area, comparing multiple sources and dealers within your state remains essential to securing the best possible deal.