The Best and Worst States to Buy a Car in 2024: Navigating Taxes, Fees, and Inventory

Best States to Buy a Car

When it comes to purchasing a new or used car, the state you’re in can make a significant difference in terms of taxes, fees, and available inventory. In this article, we’ll explore the best and worst states to buy a car in 2024, focusing on factors like sales tax, insurance costs, documentation fees, and overall car supply. So, let’s dive in and see how your state stacks up.

Best States to Buy a Car

First, let’s take a look at the states that offer the most advantages when it comes to car buying. States like Alaska, Montana, Oregon, Delaware, and New Hampshire stand out due to their lack of statewide sales tax, as well as generally low unexpected fees. Iowa is also noteworthy for its affordable insurance rates, averaging less than $720 annually.

Car insurance rates

Several other states have low statewide sales tax rates ranging from 2% to 5%. Depending on the price of the car you’re looking at, these lower sales tax rates could save you several hundred dollars or more. Some of these states include Alabama (2%), Colorado (2.9%), Hawaii (4%), Louisiana (4%), Missouri (4.23%), New Mexico (4%), New York (4%), North Carolina (3%), Oklahoma (3.25%), South Dakota (4%), and Virginia (4.15%).

Dealerships charge a documentation fee, or “doc fee,” to cover the cost of preparing and filing a sales contract. Many states don’t regulate doc fees, and the amount varies from state to state. If you’re looking for states with the lowest doc fees in 2023, consider Minnesota ($75), Arkansas ($110), Oregon ($115), South Dakota ($115), Iowa ($135), Texas ($150), Washington ($150), and Indiana ($150). While California has a very low average doc fee of $85, its high sales tax and low supply of new cars keep it far off the list of best states to buy a car in.

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Worst States to Buy a Car

Now, let’s turn our attention to the states you might want to avoid when purchasing a vehicle. Florida, California, and several southern states have the lowest supply of new cars, making it difficult to find the right vehicle. High-cost states like Alabama, Arizona, California, and Tennessee can also be problematic due to additional fees that can average around $2,000.

Documentation fees can be particularly high in Alabama, Virginia, and North Carolina, with fees ranging from $485 to $599. Florida stands out as one of the worst states for new car purchases, with no cap on doc fees (averaging $995) and limited new car inventory.

In 2024, the states with the lowest supply of new cars, according to data from CarEdge, are:

  • Georgia
  • Florida
  • California
  • New Jersey
  • Texas

However, Florida’s abundant used car market can make it a better choice for used car buyers, thanks to the state’s older population and the steady influx of used vehicles. It’s important to note that flood cars are a much bigger risk in Florida’s used car market.

FAQs

Q: Are there any states with no sales tax on cars?

A: Yes, states like Alaska, Montana, Oregon, Delaware, and New Hampshire have no statewide sales tax on cars, providing significant savings for car buyers.

Q: Which states have the lowest documentation fees?

A: In 2023, states like Minnesota, Arkansas, Oregon, South Dakota, Iowa, Texas, Washington, and Indiana had the lowest documentation fees, making them more favorable for car buyers.

Q: Which states have the highest documentation fees?

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A: Alabama, Virginia, and North Carolina have some of the highest documentation fees, ranging from $485 to $599, increasing the cost of buying a car.

Q: Which states have the lowest supply of new cars?

A: According to data from CarEdge, the states with the lowest supply of new cars in 2024 are Georgia, Florida, California, New Jersey, and Texas.

Conclusion

Choosing the right state to buy a car can have a significant impact on your overall car buying experience. States like Alaska, Montana, Oregon, Delaware, and New Hampshire offer favorable conditions with no or low sales tax and documentation fees. On the other hand, states like Florida, California, and certain southern states may present challenges due to limited car inventory and additional fees. Consider these factors and do your research before making a car purchase to ensure you make the best decision for your needs.

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