Where to Find the Best Deals on Used Cars: Which States Offer the Lowest Costs?

Shopping for a vehicle? The state you choose to purchase in could save you thousands of dollars. While the national average for a new car sits around $48,451, your location plays a critical role in determining your final out-of-pocket expenses. Beyond just the sticker price, sales taxes and dealership fees vary dramatically across America, making some states significantly more budget-friendly than others.

The Research Methodology

To identify the cheapest states to buy used cars and new vehicles, financial analysts examined data from multiple authoritative sources including Kelley Blue Book, ISeeCars, AARP, and LendingTree. The assessment evaluated three key cost components: average vehicle pricing in each state, applicable state sales tax rates, and standard dealership fees. All factors were weighted equally to determine overall affordability rankings as of August 2023.

Breaking Down the Tax Advantage

One of the most interesting findings is how dramatically sales tax policies influence your total purchase cost. Some states offer a significant advantage here—particularly those with minimal or zero sales tax obligations. This single factor can mean the difference between paying thousands more or less when you drive off the lot, regardless of the vehicle’s base price.

The Top 10 Most Affordable States for Car Purchases

Oregon Leads the Pack

Oregon claims the top spot for car buyers seeking affordable pricing. The state charges zero sales tax on vehicle purchases, and dealership fees are exceptionally low at just $353 for both new and used vehicles. Even though used cars average $28,218, the combination of tax benefits and minimal fees creates an unbeatable overall value proposition.

Montana’s Strong Second-Place Showing

Montana ranks second, also benefiting from zero sales tax. Though used vehicles average $30,906—approximately 15% above the national average—the state’s remarkably low dealership fees of $537 offset this premium. The no-tax structure proves decisive for budget-conscious buyers.

New Hampshire: Lower Vehicle Prices and No Tax

Rounding out the top three, New Hampshire combines zero sales tax with actually competitive vehicle pricing. Used cars average $25,263, which runs 5.21% below the national average. Dealership fees stay reasonable at $1,372, making this state particularly attractive for those seeking actual low prices rather than just tax benefits.

Alaska’s Surprising Affordability

Alaska presents an interesting case study. Although used car prices climb to $32,111—more than 20% above national averages—the state ranks fourth overall. The reason? Nearly non-existent dealership fees of just $315 dramatically compensate for higher base prices. Combined with a modest 1.81% sales tax, Alaska remains competitive for buyers prioritizing total transaction costs.

Delaware’s No-Tax Advantage

Delaware ranks fifth, offering zero sales tax like several other top performers. Used vehicles average $26,129, approximately 2% below the national average. However, relatively high dealership fees of $2,486 prevent the state from climbing higher on the rankings.

Hawaii: An Unexpected Contender

Surprisingly, Hawaii makes the list at number six, offering used cars priced at $25,698—roughly 3.58% below the national average. The 4.44% sales tax is among the nation’s lowest, and dealership fees run well under typical national levels, making this island state more affordable than many assume.

Virginia’s Balanced Approach

Virginia lands in seventh place with moderate sales tax at 5.77% and used car prices right at the national average ($26,764). What tips the scale in Virginia’s favor are dealership fees that run below national norms—$1,971 for used vehicles—creating solid overall value.

Wisconsin Rounds Out the Upper Half

Wisconsin’s position at number eight combines reasonable prices ($26,997 for used cars, just 1.30% above average) with the lowest sales tax rate in the top ten at 5.43%. Though dealership fees reach the highest level among these top performers ($2,069 for used cars), the overall package remains competitive.

New Mexico’s Surprising Ranking

New Mexico places ninth despite having the 16th-highest sales tax rate nationally at 7.61%. The state overcomes this disadvantage through used car prices just 4.79% above national averages and moderate dealership fees of $1,230, resulting in reasonable total costs.

North Carolina Completes the List

North Carolina rounds out the top ten with a 7.00% sales tax, used car prices 3.4% above average at $27,558, and relatively modest dealership fees of $1,623. While not the cheapest overall, the state still offers better-than-average affordability for used car shoppers.

Key Takeaways for Smart Buyers

The data reveals that finding the cheapest states to buy used cars involves more than just looking at advertised prices. Tax structures—particularly states offering zero sales tax—provide substantial savings. Meanwhile, modest dealership fees can dramatically shift the overall value equation, sometimes making states with higher base prices more affordable than expected.

When planning a vehicle purchase, consider the full cost picture across sales tax, dealer fees, and base pricing rather than focusing on any single factor.