Best States to Buy a Car in 2020
If you're thinking of purchasing a car, you're probably budgeting for a lot of different things, including insurance costs, gas, and financing. If you have saved up a downpayment, considered the features you want, practiced your negotiating skills, and have a realistic grasp on your budget, you're much closer to buying a vehicle for the best price you can get. While the cost of car ownership encompasses a lot more than just the sticker price, getting a great deal can go a long way—and just how much you will pay for your vehicle might depend on where you buy it.
Due to differences in demand, needs of the locals, and competition in each state, prices can vary widely. If you live in one of the more expensive states for car buyers, you can pay thousands of dollars in unexpected costs when you drive off the lot versus just hundreds of dollars in other states. If you fall into the first category and live relatively close to a border, it might be worth it to shop around in a nearby state.
Worst State to Buy a Used Car: California
With the cost of living skyrocketing in California and moderately high unemployment, drivers are holding onto their used cars for a lot longer, making buying a used car a competitive adventure that not many feel like they can succeed in. California has the second-highest cost of living in the country, trailing only Hawaii, but it's the most expensive state to own a car in due to the sales tax and gas prices. Add in the annual car insurance premium of $1,518, and it gets quite costly.
Best State to Buy a Used Car: Florida
Used vehicles in Florida can be nearly 10% cheaper than the national average because of an aging population that's giving up their cars each year, whether due to death or just impaired eyesight or driving abilities. Roughly 20.5% of Florida's population is at least 65 years old. On the other hand, the lifestyles of the high-rolling individuals mean that as people try to maintain a particular lifestyle, they sell their used cars along the way and exchange them for bigger, better, faster ones, making it an ideal buyers market.
When you buy a car, you are paying for a lot more than just the vehicle itself. Before you drive off the lot, you'll have to pay both state and local sales tax, registration fees, and dealer documentation fees—which are the fees that the dealership collects to cover the costs of paying the people who file paperwork for your title and registration. Some states limit the amount dealerships can charge for this convenience, but many do not.
Because a title and registration are required for the state you reside, you're not likely to save a lot of money by shopping around for a car in a lower-cost state because they'll likely charge you an additional fee for requiring out-of-state filing. However, if you are moving to a lower-cost state soon, it might be worth putting off your purchase for a bit to save more money. It would be best if you tried to find a car you can afford that is located in your state or, at the very least, in one nearby.
Worst State to Avoid Unexpected Fees: Alabama
If you want to avoid paying unexpected fees, steer clear of Alabama. Buyers in this state pay an average of $2,313 in total fees when they purchase a new or used vehicle. Luckily, Alabama has the lowest average cost of gas anywhere in the U.S. Arizona, Colorado, and Tennessee also have fees near the $2,000 range.
Best State to Avoid Unexpected Fees: Oregon
If you are buying a car in Oregon, you're in luck because the maximum processing fees for purchasing a vehicle are only $115 if the dealer doesn't use an integrator, and $150 if they use one. Alaska and New Hampshire are also fee-friendly, with fees of only a few hundred dollars.
It Pays to Know What You Want
It may seem counterintuitive that knowing the make and model of your dream car can make it cheaper to purchase, but it's true. Due to the fluctuating local markets and taste preferences of local consumers, some states tend to have great deals on particular vehicles. Prices can fluctuate week to week, and it can pay to spend a few weeks comparison shopping online and calling dealerships before driving to a faraway state in search of your dream car.
The price of buying the actual car will likely depend much more on your credit score, the type of vehicle you buy, and the specifics of your loan terms than what state you buy it in. To get the best possible deal, you should carefully do your research on the make and model you want after you evaluate your financial situation to determine how much car you can afford.
GoBankingRates. "Cost of Owning a Car for the First Year in Every State," Slide 2. Accessed March 16, 2020.
CNBC. "America’s Top States for Business in 2019." Accessed March 16, 2020.
U.S. Census Bureau. "State Population by Characteristics: 2010-2019." Accessed March 16, 2020.
GoBankingRates. "Cost of Owning a Car for the First Year in Every State," Slide 44. Accessed March 16, 2020.
Oregon DOJ. "Buying a Vehicle." Accessed March 16, 2020.