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It pays to be able to drive in the snow. 2024 is an expensive time for drivers. Insurance costs are rising rapidly in much of the country and gas prices are just coming down from a summer peak. At the same time, the price of used cars is starting to fall from their pandemic highs. In these complicated times, which states are offering drivers the best deal? NationalBusinessCapital.com’s inaugural report, The Best States To Buy And Operate A Car, found that buying and operating a car in the Northeast and Midwest is often cheaper than in the West. While the differences in overall costs between states are fairly narrow, these regions tended to come out slightly ahead thanks to generally lower used car prices, limits on supplemental fees on new cars, and lack of personal property taxes on vehicles. While you probably aren’t going to move just to buy a car, understanding what motor vehicle-related behaviors your state rewards and punishes can help you get the most mileage out of your wallet. In this environment, states like Vermont and Ohio, with their lower-priced used cars, lack of personal property taxes, and low insurance costs, offer more predictable and generally lower costs than states like Washington or Oregon. While the South tends to enjoy lower gas prices, ad valorem/personal property taxes can add substantial annual costs to owners of new cars and cars that don’t depreciate quickly in value.
Key Findings
- Western States Tend To Be The Most Expensive To Buy And Operate A Car: Car-dependent Western States, many of which have priced environmental priorities into their motor vehicle policies, tend to have higher costs than other regions. Drivers here often pay a premium on used cars, registration fees, and gas.
- Used Cars Tend To Be Cheaper In The Northeast and Midwest: The Northeast and Upper Midwest tend to enjoy slightly lower costs than other regions. While drivers may pay more in gas here in these regions, lower used car prices, lower dealer documentation fees, and a lack of personal property taxes offset the costs. Contributing factors to lower car prices include proximity to distribution points, higher population density, and the availability of competing modes of transportation. Weathering may also contribute to vehicle depreciation.
- Buying Experiences In Each State May Vary Depending On The Vehicle: Car registration fees and practices between states vary significantly, rewarding some types of vehicle ownership over others. For example, states with more aggressive environmental policies may charge additional fees for engine cylinders or levy higher taxes on gas. They may also require emission inspections. States more concerned with wear and tear on their roads may charge additional registration fees on electric or hybrid vehicles. Meanwhile, many states, particularly in the South, charge a personal property tax (or similar value-derived tax) on vehicles, which imposes higher costs on newer and more valuable vehicles.
- Cost Of New Cars Vary - Hinging A State’s Supplemental Taxes And Fees: MSRP prices on new cars are generally consistent between states. However, state policies do affect the retail cost of new vehicles. Caps on supplemental fees that can be charged by the dealer, sales tax, and personal property taxes can account for thousands of dollars in cost.
TOP 10 STATES TO BUY AND OPERATE A CAR (2024)
1. Vermont
2. Ohio
3. Minnesota
4. Delaware
5. Pennsylvania
6. Indiana
7. Wisconsin
8. Texas
9. New Hampshire
10. Mississippi
BOTTOM 10 WORST STATES TO BUY AND OPERATE A CAR (2024)
40. Montana
Score: 43.8 (out of 50), tied Sprawling Montana is more car-dependent than car-friendly, with high used car prices ($38,943, 48th), gas prices (37th), and registration fees (40th).40. Oregon
Score: 43.8, tied High insurance costs ($948, 43rd), gas prices (45th), and used car prices (38th) make operating a vehicle in Oregon an expensive prospect.42. Connecticut
Score: 43.0 Connecticut has both the higher costs typical of the Northeast–gas prices (36th) and insurance (44th), as well as the personal property taxes (45th) and dealer doc fees (44th), which are common in many other regions.43. Arizona
Score: 41.7 High sales tax (8%, 34th) and dealer doc fees (36th) make purchasing a car in the Grand Canyon fairly expensive, while high insurance costs (37th) and personal property taxes (38th) create a longer-term burden for Arizonians.44. Florida
Score: 38.6 Florida’s all but unregulated market means the sky’s the limit for dealer documentation fees ($999, 50th), and its insurance issues aren’t limited to housing (47th).45. Louisiana
Score: 38.5 Louisiana’s low gas prices (2nd) can’t offset the high price of used cars (41st), high sales tax (10%, 49th tied), and high insurance costs (39th). Ad valorem taxes (27th) add some additional burdens.46. Washington
Score: 37.5 Filling up your tank in Washington is painful (48th) if the combination of high used car prices (43rd) and sales taxes (9%, 41st, tied) don’t have you looking at bus schedules in the first place.47. Illinois
Score: 34.9 Nothing about car ownership is particularly cheap in Illinois, including registration fees (47th), used car prices (34th), gas prices (47th), and insurance (33rd).48. Colorado
Score: 34.2 Acquiring a car in Colorado is an expensive prospect thanks to high dealer fees ($699, 47th), used car prices (35th), and sales taxes (34th, tied). High insurance premiums (33rd) and an ownership tax (40th) add recurring costs.49. California
Score: 32.6 California caps dealer documentation fees ($85, 1st), but it won’t offset the state’s high sales tax (41st), gas prices (49th), or registration fees (45th). Finding a competitively priced used car may also be challenging (40th).50. Nevada
Score: 30.1 Surprisingly high insurance costs ($1,164, 48th), gas prices (46th), and a “Governmental Services Tax” that stands in for a personal property tax (36th) all help sink Nevada to the bottom of our list.COMPLETE RANKING OF ALL 50 STATES (2024)
Methodology
To create our rankings, we selected seven metrics to evaluate the typical costs of buying a car within the state. For each metric, the state was given a rank. Each metric was multiplied by a selected weight and then normalized and aggregated to get a score out of 100. The best-performing states have a higher score than lower-performing ones. Some cautions with this data. While we tried to model a typical buying experience, auto fees are highly variable in each state depending on the type of vehicle being registered, the locality in which it’s purchased, whether the engine is gas or electric, etc. The seven metrics we chose were:- Dealer Document Fees (10%): While the ticket price on any given model of a new car tends to be the same from state to state, supplemental fees charged by dealers at the time of sale do vary. Some states cap these fees while others do not. Data was sourced from CarEdge.
- Average Used Car Price (26%): This metric represents the average price of used cars sold within the state in 2022. Data was sourced from ISeeCars.
- Average Gas Price (15%): This metric represents the average cost of a gallon of regular gas within the state, 8/5/24. Data was sourced from AAA.
- Sales Tax (12%): This metric represents average sales taxes within the state. Data is sourced from the Tax Foundation.
- Registration Fees (10%): This metric includes typical registration costs for a gas-engine, four-cylinder passenger vehicle within the state, including registration fees, inspection fees, weight fees, road fees, etc. It does not include MSRP-derived fees such as personal property taxes or ad valorem taxes. Data was sourced from respective state motor vehicle departments.
- Insurance Costs (15%): This metric is the typical annual cost of a liability-only auto insurance policy within the state. Data was sourced from Statista.
- Personal Property Taxes (12%): This metric includes MSRP-derived, recurring personal property, ad valorem, or excise taxes many states charge per car owned. Data was sourced from respective state motor vehicle departments.