Where to Get the Best Used Car Deals: A State-by-State Cost Breakdown

New car prices have soared to unprecedented levels, with the national average hitting $48,451 in August 2023. But here’s what catches most people off guard: the state with cheapest used cars and most affordable overall car ownership can be determined by looking beyond just vehicle prices. Sales taxes, dealer fees, and regional pricing variations create significant cost differences—sometimes thousands of dollars—between neighboring states.

To identify which states offer the most favorable purchasing conditions, we analyzed data across vehicle prices (both new and used), sales tax rates, and dealership fees using information from major sources including Kelley Blue Book, ISeeCars, AARP, and LendingTree. The analysis covered August 2023 data, examining how these factors combine to create the true cost of car ownership across America.

The Regional Cost Advantage: How These 10 States Win

The following ranking reveals which states deliver the strongest value proposition for vehicle buyers:

1. Oregon - The Affordability Champion

Sales Tax: 0.00% Average New/Used Car Price: $51,299/$28,218 Average Dealer Fees: $353/$353

Oregon’s top position stems from a powerful combination: complete elimination of sales tax on vehicle purchases plus the second-lowest dealer fees nationwide. Although new car prices run slightly above the national average, the fee structure makes this the most cost-effective state overall. The minimal $353 dealer fee on both new and used vehicles creates substantial savings compared to the national norm.

2. Montana - Tax-Free Advantage Meets Low Fees

Sales Tax: 0.00% Average New/Used Car Price: $56,186/$30,906 Average Dealer Fees: $537/$537

Montana demonstrates how tax policy can offset higher base prices. Despite new vehicles averaging 15% above the national benchmark and used cars running significantly higher, the zero sales tax combined with the third-lowest dealer fees in the country (just $537) compensates buyers. This state proves that avoiding sales tax can balance out regional pricing variations.

3. New Hampshire - Lowest Used Car Pricing Plus Tax Breaks

Sales Tax: 0.00% Average New/Used Car Price: $45,928/$25,263 Average Dealer Fees: $1,372/$1,372

New Hampshire emerges as the state with cheapest used cars among top-ranking options, with used vehicles priced 5.21% below national averages. Combined with zero sales tax and reasonable dealer fees below four digits in absolute terms, the state offers genuine affordability. New car pricing here also ranks among the nation’s lowest.

4. Alaska - Lowest Dealer Fees Transform the Equation

Sales Tax: 1.81% Average New/Used Car Price: $58,377/$32,111 Average Dealer Fees: $315/$315

Alaska presents an unusual case: new vehicle prices exceed the national average by over 20%, yet the state still ranks in the top four. The key differentiator is having the lowest dealer fees in the entire nation at just $315 for both vehicle types. This dramatic fee advantage effectively neutralizes the higher sticker prices, making it a competitive choice for budget-conscious buyers.

5. Delaware - No Sales Tax, Low Used Car Costs

Sales Tax: 0.00% Average New/Used Car Price: $47,502/$26,129 Average Dealer Fees: $2,486/$2,486

Delaware is one of four states nationwide offering zero sales tax on vehicle purchases. Used cars here run approximately 2% below national pricing. However, relatively higher dealer fees ($2,486) prevent the state from climbing further up the rankings despite these tax and pricing advantages.

6. Hawaii - Surprising Affordability in Paradise

Sales Tax: 4.44% Average New/Used Car Price: $46,718/$25,698 Average Dealer Fees: $2,179/$1,620

Hawaii surprises many with competitive car pricing that runs 3.58% below the national average. The combination of modest sales tax (4.44%) and moderate dealer fees creates affordability despite the state’s remote location and reputation for higher costs on most goods. Used vehicles here are particularly reasonably priced.

7. Virginia - Balanced Pricing and Fees

Sales Tax: 5.77% Average New/Used Car Price: $48,656/$26,764 Average Dealer Fees: $2,486/$1,971

Virginia maintains close alignment with national averages across most metrics. New car prices exceed the national average by just 0.42%, while dealer fees stay comfortably below typical levels. The moderate sales tax rate combined with near-average pricing produces overall cost-effectiveness for both new and used vehicle purchases.

8. Wisconsin - Low Sticker Prices, Higher Fees Offset

Sales Tax: 5.43% Average New/Used Car Price: $49,080/$26,997 Average Dealer Fees: $2,753/$2,069

Wisconsin features new vehicles priced just 1.30% above the national average with moderate sales tax. Although dealer fees rank as the highest within these top 10 states, they remain reasonable compared to national benchmarks. The overall package delivers solid value for buyers in the region.

9. New Mexico - Tax Burden Balanced by Pricing

Sales Tax: 7.61% Average New/Used Car Price: $50,770/$27,926 Average Dealer Fees: $1,603/$1,230

New Mexico’s sales tax ranks as the 16th-highest nationally at 7.61%, yet the state maintains competitive positioning through careful balance elsewhere. Vehicle prices run 4.79% above the national average, while dealer fees stay relatively restrained, particularly for used cars. This combination keeps New Mexico in the affordability rankings despite higher taxation.

10. North Carolina - Dealer Fee Advantage Wins Out

Sales Tax: 7.00% Average New/Used Car Price: $50,100/$27,558 Average Dealer Fees: $1,996/$1,623

North Carolina closes out the top 10 with relatively elevated sales taxes (7.00%), but competitive dealer fees provide the offset. New and used car prices average 3.4% above national levels, yet the fee structure remains favorable enough to keep the state in the affordability rankings.

What Drives These Cost Differences

The variation in total car ownership costs reflects three primary factors working in concert: base vehicle pricing varies regionally due to supply chain factors and local market conditions; sales tax rates create dramatic swings—ranging from zero in several states to over 7% in others; and dealer fees fluctuate based on state regulations and local market practices, ranging from $315 to over $2,700 per transaction.

Understanding these dynamics helps explain why buying the same vehicle in neighboring states can result in significantly different final costs. A savvy buyer considering relocation or shopping across state lines can capture thousands in savings.

The Takeaway

Finding affordable vehicles requires looking beyond simple purchase prices. Tax policy and dealer fee structures play equally important roles in determining true affordability. Whether seeking the state with cheapest used cars or the lowest overall car ownership costs, these top 10 states offer the most favorable combinations of pricing, taxation, and fees for today’s car buyers.