Where to Buy Cars Cheapest: The 10 Most Affordable States Ranked

When shopping for a vehicle, most buyers focus on the car itself—but they often overlook a critical factor that can save them thousands: location. Your state of residence determines not just the purchase price, but also the sales tax, dealer fees, and overall cost of ownership. Finding the right state with cheapest cars involves balancing three key elements: vehicle pricing, state taxes, and dealership fees.

Research from GOBankingRates combined data from Kelley Blue Book, ISeeCars, AARP, and LendingTree to identify where car buyers get the best overall deals. The analysis examined average new and used car prices, state sales tax rates, and dealer service fees across all 50 states, revealing significant regional variations.

Understanding the Cost Breakdown

Before diving into specific states, it’s important to understand what makes certain markets more affordable. A state with cheapest cars isn’t necessarily one with the lowest sticker prices—it’s one where the total cost equation works in the buyer’s favor.

Some states compensate for higher vehicle prices with minimal sales taxes or negligible dealer fees. For example, states with zero sales tax dramatically reduce the total purchase amount, even if the base car price runs slightly above the national average. Conversely, a state with below-average car prices might still rank lower in overall affordability if sales taxes and dealer fees are substantial.

The national average new car price in 2023 stood at approximately $48,451. States ranking as the most affordable typically fall within 5% of this figure when combined with their tax and fee structures.

The Top 10 Cheapest States for Car Buyers

10. North Carolina – Sales tax: 7.00% | Avg. new/used car: $50,100/$27,558 | Dealer fees: $1,996/$1,623

Despite higher sales taxes, North Carolina makes the list because dealer fees remain relatively low, offsetting the car prices that run about 3.4% above the national average.

9. New Mexico – Sales tax: 7.61% | Avg. new/used car: $50,770/$27,926 | Dealer fees: $1,603/$1,230

New Mexico’s high sales tax (16th highest nationally) is counterbalanced by reasonable dealer fees and prices only 4.79% above average, making it an economical choice for budget-conscious buyers.

8. Wisconsin – Sales tax: 5.43% | Avg. new/used car: $49,080/$26,997 | Dealer fees: $2,753/$2,069

Wisconsin demonstrates how moderate sales taxes and prices just 1.30% above average can compensate for higher dealer fees, which remain competitive on a national scale.

7. Virginia – Sales tax: 5.77% | Avg. new/used car: $48,656/$26,764 | Dealer fees: $2,486/$1,971

Car prices in Virginia align closely with national averages (just 0.42% above), while dealer fees stay comfortably below national norms, creating an affordable purchase environment.

6. Hawaii – Sales tax: 4.44% | Avg. new/used car: $46,718/$25,698 | Dealer fees: $2,179/$1,620

Surprisingly, Hawaii offers vehicle prices 3.58% below the national average. Combined with a reasonable sales tax and moderate dealer fees, the state creates an affordable market despite its island location.

5. Delaware – Sales tax: 0.00% | Avg. new/used car: $47,502/$26,129 | Dealer fees: $2,486/$2,486

Delaware is one of just four states without sales tax on vehicle purchases—a major advantage that helps it rank in the top five. Even though car prices run about 2% below average, elevated dealer fees prevent it from climbing higher.

4. Alaska – Sales tax: 1.81% | Avg. new/used car: $58,377/$32,111 | Dealer fees: $315/$315

Alaska presents an interesting case: despite car prices exceeding the national average by over 20%, the state ranks fourth due to having the nation’s lowest dealer fees at just $315 for both new and used vehicles.

3. New Hampshire – Sales tax: 0.00% | Avg. new/used car: $45,928/$25,263 | Dealer fees: $1,372/$1,372

New Hampshire combines the advantage of zero sales tax with dealer fees well below the national average and car prices among the lowest in the country—5.21% below average—making it a top choice for affordability.

2. Montana – Sales tax: 0.00% | Avg. new/used car: $56,186/$30,906 | Dealer fees: $537/$537

Montana buyers benefit from both zero sales tax and the third-lowest dealer fees nationally. Despite car prices running over 15% above average, the favorable tax and fee structure propels the state to the second spot.

1. Oregon – Sales tax: 0.00% | Avg. new/used car: $51,299/$28,218 | Dealer fees: $353/$353

Oregon emerges as the state with cheapest overall car ownership costs. The combination of zero sales tax and the second-lowest dealer fees in the nation ($353) creates unbeatable affordability, even with car prices slightly above the national average.

Key Takeaways for Smart Shopping

The data reveals that finding the most affordable states for car purchases requires looking beyond sticker prices. Tax policies play an outsized role—four of the top five states (Delaware, New Hampshire, Montana, and Oregon) charge zero sales tax on vehicle purchases. Dealer fees represent another significant variable, ranging from a low of $315 in Alaska to much higher amounts in other states.

Location matters substantially: a buyer relocating just one state over could save thousands of dollars on the same vehicle. For those considering major purchases, researching state-specific factors before finalizing a purchase decision can yield substantial savings.

The analysis is based on 2023 data from August, compiled using methodology that weighted all factors equally—vehicle pricing, sales taxes, and dealer fees—to determine overall affordability across all 50 states.