The cheapest states to buy a car – Forbes Advisor

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The cost of buying a car can vary depending on various factors. But if you want to buy a car and hope to keep costs as low as possible, where you buy it matters.

Next to a home or college education, a car is one of the most expensive purchases one can make. If you are currently in the market for a new vehicle, your search has probably come as a shock to stickers, as the average cost of a new car is now a record $ 47,000, according to the Kelly Blue Book.

Why are car prices so high?

So one of the biggest expenses associated with buying a new car is the car itself. For new cars, the price is based on the Manufacturer’s Recommended Retail Price (MSRP), which is the price of a sticker you see on a car window. This price is determined by the car manufacturer.

However, the MSRP has not been established and only serves as a starting point for negotiations. In fact, it is common for car buyers to end up paying less than the vehicle’s MSRP. That is, in normal times.

Even two years after the Covid-19 pandemic, car prices are still rising sharply, breaking record prices steadily. Supply chain breaks have led to stock shortages, which means consumers could end up paying more than the MSRP to get their hands on a coveted car.

One way to avoid paying a hefty dollar for a car is to buy a used one.

Best States for Buying a Used Car

Buying a used car can save you money, but even used car prices are on the rise. According to CarAndDriver.com, the average used car costs about 35% more today than it did in early 2021.

That said, some markets are cheaper than others. So if you want to save money on the initial cost of a used car, you may want to consider looking overseas. However, keep in mind that there may be shipping costs and additional registration fees for overseas vehicles.

Here are the five states with the lowest average used car prices based on car sales from February to July 2021, according to iSeeCars.com:

  1. Indiana: $ 21,961 (11.1% below national average cost)
  2. Ohio: $ 22,244
  3. Connecticut: $ 22,528
  4. Virginia: $ 22,618
  5. Kentucky: $ 22,995

The Worst States for Buying a Used Car

Alternatively, the five states with the highest average used car prices are:

  1. Alaska: $ 29,656 (20% above the national average)
  2. Wyoming: $ 29,419
  3. Montana: $ 27,303
  4. Arkansas: $ 27,123
  5. Idaho: $ 26,662

Best States for Low Car Charges

Even when you have agreed on a final price with the dealer, you can expect additional charges. Dealership fees, which help cover the dealership’s administrative costs of selling a car, are usually non-negotiable.

Some states set a limit on what agents can charge for documentation fees, but most do not. Alaska has no limit on dealer documentation charges, but requires that the charge be included in the final price of the car.

Currently, the states with the lowest average dealer document charges include:

  • California: 55 $
  • Oregon: 61 $
  • New York: 74 $
  • Minnesota: 75 $
  • South Dakota: 93 $

states without sales tax

State sales taxes can also make a big difference in the final cost of a car. For example, if you were to buy a new car for $ 45,000 in California, where combined state and average local sales tax is 8.68%, you could end up spending an extra $ 3,906 in taxes alone.

The state sales tax, however, is only part of the equation. There are 38 states that also levy a local sales tax in addition to their state tax, each of which varies by location. In some cases, local sales tax rates are indirectly proportional to their state tax, thus offsetting the total sales tax. In other words, a state’s tax rate could be high but the local sales tax low, resulting in a more balanced – and more manageable – overall tax rate.

For example, look at these top five states for the most expensive combined sales tax rates, according to the Tax Foundation: Tennessee (9.55%). Louisiana (9.52%); Arkansas (9.51%); Washington (9.23%) and Alabama (9.22%). While California has the highest sales tax in the entire state, its lower local rates offset that amount that prevents it from entering this list.

The states that do not impose any sales taxes throughout the state are:

  • Alaska (allows sites to charge local sales taxes)
  • Delaware
  • Montana
  • New Hampshire
  • Oregon

The following are the states with the lowest average combined rates:

  • Alaska (1.76%)
  • Hawaii (4.44%)
  • Wyoming (5.33%)
  • Wisconsin (5.43%)
  • Maine (5.50%)

In terms of taxation, these are some of the cheapest states to buy a car. The bad news: Buying overseas will not help you save money on sales taxes. This is because taxes are calculated based on where the vehicle is registered and not purchased.

Is it cheaper to buy a car abroad?

As you can see, some states may be cheaper for some car buying costs and more expensive for others. Alaska, for example, has some of the lowest sales taxes, but the highest used car prices and dealership fees.

That’s why it’s important to do some research before buying overseas. If you are looking for a specific make and model or rare vehicle, you can realistically expect to have to cross the status lines to find it. Or if you are planning to move to a state with lower taxes or fees in the near future, it may be a good idea to stop buying your car to save money.

In general, however, buying overseas may not save you much. A car in a lower priced state can help you save money in advance, but you could end up spending as much or more money at home as expenses such as sales taxes, out-of-state registration fees, or receiving it. vehicle to pass local inspections and emission tests.

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