Where To Find The Cheapest Cities To Buy A Car: State-by-State Breakdown

When the average new car price soars past $48,000, savvy buyers know that location matters just as much as the vehicle itself. Your state of residence can mean the difference between paying thousands extra or scoring a genuine deal on your next purchase.

The real surprise? Some states that seem expensive actually offer the cheapest cities to buy a car once you factor in sales tax and dealer markups. Meanwhile, others with lower sticker prices can shock you with hidden costs.

The Hidden Cost Factors That Define Affordability

Car affordability isn’t just about the price tag on the windshield. Three variables stack up to create your final bill:

Sales Tax Variations Across States

State sales taxes range from zero to over 7.6%. This single factor can swing your total cost by thousands. Oregon and Montana buyers pay no sales tax whatsoever, instantly making them competitive despite other factors.

Dealer Fees: The Wildcard Nobody Discusses

Here’s where things get interesting. Dealer fees vary wildly—from as low as $315 to over $2,700. These aren’t negotiable in most states and directly impact your out-the-door cost.

Vehicle Pricing Premiums

National average prices fluctuate, but some states consistently price vehicles above or below the baseline. Alaska, for instance, charges over 20% premium on vehicles, yet remains affordable due to compensating factors.

Top States Where Purchasing A Car Costs The Least

Oregon Claims The Top Spot

No sales tax combined with the second-lowest dealer fees ($353) makes this the cheapest cities to buy a car destination. Even at $51,299 for new vehicles, Oregon’s overall economics are unbeatable.

Montana’s Tax-Free Advantage

Montana matches Oregon’s zero sales tax policy but with third-lowest dealer fees nationwide ($537). New car prices run 15% above national average, yet the math still works in buyers’ favor.

New Hampshire’s Hidden Gem Status

Zero sales tax, $45,928 average new car prices (5.21% below national average), and reasonable dealer fees ($1,372) create a trifecta. This state frequently appears on cheapest cities to buy a car comparisons for good reason.

Alaska Defies Expectations

Though vehicles cost over 20% more upfront, Alaska’s rock-bottom dealer fees ($315) flip the equation entirely. The state demonstrates that raw price isn’t everything.

Delaware’s Tax-Free Policy

Zero sales tax helps, though $2,486 dealer fees keep it from climbing higher. Used car pricing sits 2% below average, providing modest savings.

Hawaii’s Surprising Affordability

Perhaps counterintuitively, Hawaii prices vehicles 3.58% below national average. The 4.44% sales tax and moderate dealer fees ($2,179 new, $1,620 used) combine favorably.

Virginia Offers Balanced Economics

Sales taxes stay moderate at 5.77%, car prices hover near national average (+0.42%), and dealer fees undercut norms. This creates steady, predictable affordability.

Wisconsin’s Reasonable Structure

Despite highest dealer fees in the top 10 ($2,753 new), Wisconsin compensates with only 5.43% sales tax and car prices just 1.30% above baseline.

New Mexico Manages Higher Taxes

The 16th-highest sales tax in the nation (7.61%) might seem prohibitive, but prices only 4.79% above average and reasonable dealer fees ($1,603 new) offset this burden.

North Carolina Rounds Out The List

Relatively high 7.00% sales tax gets balanced by low dealer fees ($1,996 new, $1,623 used). New and used car prices run 3.4% above national average—manageable despite tax rates.

The Real Takeaway For Smart Car Shoppers

Finding the cheapest cities to buy a car requires looking past headlines. A state with high sticker prices might offer better total value due to minimal dealer charges. Conversely, low-tax states compensate for premium pricing with reduced fees.

Your strategy should combine understanding your state’s tax environment, anticipating dealer fees, and comparing actual vehicle pricing. These three components determine whether you’re getting genuine savings or paying premium prices regardless of location.