Where To Find the Cheapest Used Cars: A State-by-State Cost Analysis

The average new car price in America hovers around $48,451, but what many buyers overlook is that your location significantly shapes your final expenses. Whether shopping for used cars or new vehicles, affordability can swing dramatically from one state to another — sometimes by thousands of dollars. State sales taxes, dealer fees, and regional pricing variations all compound to create vastly different ownership costs across the nation.

Understanding the Cost Variables

When evaluating where to buy used cars most affordably, three factors dominate: vehicle pricing in that specific region, the sales tax rate imposed by the state, and dealer fees charged to complete the transaction. GOBankingRates conducted a comprehensive analysis using data from Kelley Blue Book, ISeeCars, AARP, and LendingTree to identify which states offer the best value for car buyers.

The findings reveal that some states enjoy massive advantages. August 2023 data shows that average used car prices range from $25,263 in New Hampshire to $32,111 in Alaska, while sales taxes span from zero in several states down to 7.61% in New Mexico. These variations matter enormously when calculating total out-of-pocket expenses.

The Clear Winners for Affordable Vehicle Purchases

Oregon leads the nation as the premier destination for cost-conscious car buyers. The state charges zero sales tax on vehicle purchases and imposes remarkably low dealer fees (just $353 for both new and used cars). While August 2023 average prices reached $51,299 for new vehicles and $28,218 for used cars, the combination of no sales tax and minimal dealer fees makes Oregon unbeatable on overall affordability.

Montana ranks second despite car prices running more than 15% above the national average at $56,186 for new and $30,906 for used vehicles. The secret lies in Montana’s zero sales tax policy coupled with among the nation’s lowest dealer fees at merely $537. This two-pronged tax advantage offsets the higher sticker prices.

New Hampshire rounds out the top three, offering some of the lowest used car prices nationally at just 5.21% below average. Combined with zero sales tax and dealer fees under $1,400, the state provides substantial savings for vehicle shoppers.

Mid-Tier Alternatives Worth Considering

States like Delaware (zero sales tax but higher dealer fees), Alaska (exceptionally low $315 dealer fees despite elevated car prices), and Hawaii (prices 3.58% below national average) present middle-ground options. Each state compensates for weakness in one category with strength in another.

Virginia rounds out the affordable middle tier with moderate sales taxes of 5.77%, prices virtually aligned with national averages, and dealer fees well below standard norms. New Mexico maintains competitiveness despite a 7.61% sales tax through reasonable pricing and modest dealer costs.

Why Location Matters for Total Cost of Ownership

The data demonstrates that purchasing used cars in tax-friendly states can yield savings measured in thousands of dollars compared to high-tax regions. Even modest differences in dealer fees — ranging from $315 to $2,753 depending on the state — accumulate into meaningful expenses when combined with sales tax obligations.

Smart car buyers recognize that negotiating price matters less when state regulations, tax structures, and fee schedules work against them. Conversely, favorable state conditions can partially offset higher purchase prices, making states like Montana and Alaska surprisingly competitive despite elevated vehicle costs.

Methodology: Analysis evaluated new and used car pricing, sales tax rates, and average dealership fees across all states using August 2023 data from established automotive and financial databases. States were ranked using percent deviation from national averages across all measured categories, with equal weighting applied to each factor.