Cheapest States To Buy A Car in 2025

Buying a car can be costly, so if you want to save money, where you choose to buy it is essential. Next to major expenses like buying a home or going to college, cars also rank highly. If you’re in the market for a new vehicle, be prepared for a bit of a surprise: according to Kelly Blue Book, the average price of a new car is approaching $47,000.

It’s quite a bit! Therefore, it’s important to consider where you’re going to buy your new wheels if you’re considering getting them. Making an informed decision that doesn’t break the bank can be greatly simplified by being aware of how prices change based on your locat

Top Cheapset State to Buy New and Used Cars 2025

Are you looking for the cheapest state to purchase a new or used car at an affordable price without sales tax? You can consider one of these states closest to you: Oregon, New Hampshire, Montana, Delaware, or Alaska.

1. Oregon

Oregon is one of the best and cheapest states to buy a car, with 0% sales tax and free registration. The average cost to purchase a new car ranges from $33,071 to $40,000, and the average dealer fees for both new and used cars are approximately $353.

While the purchase price is important, it’s just one part of the total cost of owning a vehicle. You also need to consider ongoing expenses such as fuel, insurance, and maintenance, which can add up over time. The good news is that Oregon doesn’t charge sales tax on vehicles. This can help offset higher upfront costs and save you money in the long run.

2. New Hampshire

New Hampshire is the second cheapest state to buy a car. The state has no sales tax, and dealer fees typically range from $650 to $850. The average cost of a new car is about $48,000. However, many factors can affect the final price.

These factors include:

• Demand for luxury SUVs
• Demand for full-size SUVs
• Manufacturer incentives
• Inventory levels
• Market demand
• Possible tariffs

3. Montana

According to CBT News, the average cost of a used car in New Hampshire ranges from $27,000 to $30,000. Buyers can potentially save between $3,000 and $4,000 compared to purchasing in higher-cost states.

Montana is the third cheapest state to buy new or used cars in 2025. The average price to purchase a car depends on whether it is new or used, as well as the car’s make and model (e.g., SUV, luxury vehicle). The state offers low sales tax and low registration fees. However, Montana’s relatively high insurance rates can offset some of these savings.

According to CarEdge:

Average Cost: $49,740

Total Additional Costs: $500–$750

Average Savings vs. Most Expensive States: $3,000+

4.  Delaware

Delaware has 3 main benefits: no sales tax, low registration fees of $40 to $60, and no vehicle inspection for newer cars. These significantly reduce both upfront and ongoing vehicle ownership costs.

A 2023 study from the University of Delaware found that states with a 0% vehicle sales tax reduce the average purchase price by 4% to 7%. For a $35,000 car, this results in savings of $1,400 to $2,450. Delaware applies this across both new and used cars.

Delaware’s registration costs are fixed based on vehicle weight, not value, helping buyers avoid high DMV fees. For most passenger vehicles under 5,000 lbs., the annual fee is approximately $40, compared to $100–$200 in states like California or Illinois.

In Delaware, insurance premiums average $1,730 a year. This is a bit higher than the national average of $1,668, according to the National Association of Insurance Commissioners. However, Delaware has no sales tax and low dealer fees, usually between $120 and $180 per transaction.

Used car buyers benefit as well. The average price of a used vehicle in Delaware is $25,900. This is 7.3% lower than in Pennsylvania and 6.1% lower than in New Jersey, based on 2024 data from iSeeCars. Delaware has a strong local dealership network. Its closeness to big ports helps keep prices low.

Despite slightly higher insurance costs, total savings per vehicle in Delaware range from $2,100 to $3,500, depending on make and model. Most counties don’t require emissions testing. Vehicle inspections are needed only every two years for older cars. This saves time and maintenance costs.

5. Alaska

Alaska is the fifth most affordable state to buy a car in 2025. There is no statewide sales tax, and most local jurisdictions also refrain from charging one. This can cut the total transaction cost by 4% to 6%. It’s much better than tax-heavy states such as California and Illinois. Dealer fees in Alaska average between $500 and $775, depending on the city and dealership size.

The average new car price in Alaska in 2025 is $46,500, based on dealership reporting from Anchorage and Fairbanks. Used cars range from $25,500 to $28,000, depending on vehicle class and mileage. A study by the University of Alaska’s Transportation Economics Department (2024) shows that fewer dealerships in rural areas mean lower markups. This is especially true for standard sedans and compact SUVs.

There are 5 main factors impacting car prices in Alaska:

1. Lower dealer competition in remote areas.
2. Reduced demand for luxury vehicles.
3. Consistent manufacturer-to-dealer incentives on 4WD and AWD models.
4. Minimal local regulatory fees.
5. Flat registration costs regardless of vehicle value.

Buyers save about $3,200 to $4,100 compared to the national average. This includes total costs like taxes, registration, and dealer fees. The Subaru Outback, Toyota Tacoma, and Ford Escape are popular vehicles. They are in demand because they handle the weather well and hold their value.

Best Cheapset State to Buy Used Cars

Oregon is the cheapest state to buy a used car in 2023, according to Copilot Search. This is because Oregon has the lowest unexpected fees in the country, including document processing fees and dealer fees. Other cheap states for used cars are Alaska, Montana, Oregon, Delaware, and New Hampshire.

However, there are some variations in the price tags. If you’re looking for a cheap used car, it can be worthwhile to consider your alternatives in different states. However, it’s important to keep in mind that bringing an out-of-state car home can result in additional costs like shipping and registration taxes.

Buying a Used Car In Indiana (11.1% less expensive than the National average)

With low prices cars 11.1% below the national average, Indiana offers a workable alternative. The opportunity to save a lot of money while getting a good used car is available to buyers.  Average cost will be $21,961.

Buying a Used Car In Ohio

Ohio continues to retain a competitive average used car pricing, making it a desirable location for individuals seeking affordable automobile options. The Average cost for New or used car will be $22,244.

Massachusetts

Massachusetts has a very affordable average price for used cars, making it a viable option for prospective buyers despite its reputation for having higher living expenses. The Average price will be $22,528.

Virginia

The used automobile market in Virginia has a competitive average price, giving customers the opportunity to purchase high-quality vehicles without spending a fortune. Average cost for new and used car $22,618.

Kentucky

Kentucky completes our list with a used car average price that is in the middle of the range, making it a viable choice for buyers on a budget. The Average price in Kentucky for new & used cars is $22,995.

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Cheapest Dealership & Car Auction Sites for Buy New Car

Here are some of the cheapest car dealerships and auction sites in Indiana, Ohio, Connecticut, Virginia, and Kentucky:

States to Avoid Buying a New or Used Car in US

Certain states can present financial challenges when it comes to buying a new or used car in the United States. The total costs could go up because of the high dealer documentation fees and sales taxes such as:

California: High sales taxes leading to increased overall costs
New York: Elevated dealer documentation fees
Washington: High sales tax combined with additional fees impacting the budget
Wyoming: Higher-than-average used car prices
Hawaii: High living costs contributing to increased vehicle prices

States Without Sales Tax

Some states, such as New Hampshire, Delaware, Montana, Alaska, and Oregon, do not charge sales tax on the purchase of new and used cars. This can save you a significant amount of money, especially on a more expensive car. However, it is important to note that some states may charge other fees, such as registration fees or excise taxes, which can be similar to sales tax.

If you are considering buying a car in one of these states, be sure to do your research to understand all of the fees that you may be responsible for. You should also compare prices from different dealerships to ensure that you are getting the best deal possible.

If you are purchasing a car online, be sure to research reputable car auction companies and compare their prices with those of dealerships. For example, a $45,000 car could cost an extra $3,906 in sales taxes in some states.

Why are These States the Cheapest to Buy a Car with the Lowest Prices?

There are several reasons why car prices are reasonable in these states:

Local Market Dynamics

The local market dynamics that affect car prices vary by state. Lower prices may result from a number of factors, including consumer demand, dealership competition, and general economic conditions in these states.

Cost of Living

Prices for goods and services, including cars, are frequently more competitive in states with lower overall costs of living. Dealerships may modify their pricing policies in response to local economic developments.

Availability of Used Cars

The pricing of used cars can be influenced by the factors of supply and demand. States with greater availability of second hand cars—through trade-ins or other means—may see cheaper costs than regions with less supply.

Dealer Competition

Lower profit margins on selling cars could result from fierce competition among dealerships in these states. In a highly competitive market, dealers may feel more pressure to draw customers in with competitive pricing.

Local Taxes and Regulations

Differences in state taxes and regulations can have an impact on the total cost of a car. A reduced total cost may result from certain states having reduced taxes or fees related to car purchases.

Is It Cheaper To Buy a Car Out of State?

If you are considering buying a car out of state, be aware that the car price may be higher and the dealership fees may be higher as well. However, the sales tax may be lower. Before buying a car from out of state, it is important to conduct research on the state sales tax, dealership fees, and car model and price and car shipping cost.

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What Paperwork do I Need to Buy a Car from a Private Seller

Title

The title is a proof-of-ownership document that identifies you as the car’s owner. It will have to be changed from the dealership’s name to yours. For any future transactions involving the car, including selling it or changing ownership, it’s an essential document.

Bill of Sale

The bill of sale functions as a kind of purchase receipt. It describes the particulars of the deal, such as the car’s specifications, the purchase price, and any additional costs. You will sign it acknowledging the agreement along with the dealership.

Warranty Agreement

If the dealership offers a warranty, the agreement outlines what is covered and how long it lasts. It is crucial to comprehend the warranty’s conditions, restrictions, and limits. This paperwork gives you peace of mind in case the car develops problems soon after you buy it.

States Where Cars are Cheaper for Auto Insurance

There are a few states where auto insurance is cheaper: Maine, Vermont, New Hampshire, North Carolina, Ohio, Wisconsin, Idaho, Iowa, Minnesota, South Dakota, and Indiana. The Avarge insurance cost is $900 in all these states. It is important to note that your auto insurance premium can vary significantly depending on your individual factors, such as your driving record, age, and the type of car you drive.

Final Remarks

Final Remarks
There are numerous elements to consider whether you’re thinking about buying a car in Oregon, New Hampshire, and Montan or any other cheapset state buy new and used cars. The best state in 2025 for buying a car should take into account more than just the original cost, including potential supplemental costs, taxes, and insurance rates. It’s important to keep in mind that things like transportation costs and registration fees may affect the overall value when looking for the greatest price.

Utilising a car shipping cost calculator from NexGen Auto Transport may give you important insights into the overall costs related to buying a car from out of state, which will help you make a more informed decision. A well-informed and financially sound conclusion is ensured by careful evaluation of all these factors.