New and Used Car Market
The car market has seen some significant fluctuations in the past several years as we all grappled with the global pandemic and the resulting semiconductor shortage.
Supply and demand is ruthless and we saw some of the highest car prices in a long time, with inventory finally stabilizing and coming back down in 2024 as the government tries to cool inflation by raising interest rates.
Credit: Vecteezy
For prospective shoppers who are looking to buy a vehicle, some of the questions they’ll ask themselves are: should I get a new or used car? Where can I find a deal? Is it worth finding a car in another state?
According to Statista, the average new car in the US is just over $47,000 as of 2023. New consumer cars and trucks were sold on average around $17,700 more than lightly used vehicles given the good ol’ depreciating factor and minor wear and tear.
Using data on 1.9 million 1-5-year-old used car sales between December 2021 and 2022, iSeeCars also estimated that the national average for a used vehicle is around $33,582.
The 10 states with the lowest and highest average used car prices are as follows:
| Rank | State | Average Used Car Price |
| 1 | Vermont | $31,445 |
| 2 | New Hampshire | $31,833 |
| 3 | Ohio | $32,267 |
| 4 | Hawaii | $32,381 |
| 5 | Rhode Island | $32,789 |
| Average Used Car Price $33,582 | ||
| 46 | South Dakota | $37,192 |
| 47 | North Dakota | $37,773 |
| 48 | Montana | $38,943 |
| 49 | Alaska | $40,462 |
| 50 | Wyoming | $41,405 |
- Vermont is the state with the lowest average used car price of $31,445.
- Wyoming is the state with the highest average used car price of $41,405.
- Seven of the 10 states with the lowest used car prices are East Coast states.
Source: ISeeCars
See their full study here.
But before you quickly hop online to look at cars in Vermont, let’s walk through some of the pros and cons, as well as other considerations that can influence the bottom line.
Pro: There Are Savings To Be Had
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When buying a car out of state, there can be significant savings. Prices can fluctuate based on the state due to various factors such as supply and demand, state taxes, and economic conditions.
Price Fluctuations Based on State
For instance, in Canada, the cost of cars can differ notably between provinces. Even within provinces like Alberta, you can typically find that on average, entry-level cars can be up to $3000 cheaper in cities like Edmonton compared to growing metropolitans like Calgary.
Factors contributing to this include different sales tax rates, varying luxury tax laws, and the overall economic conditions in each area. In provinces like British Columbia, most goods and services in British Columbia are subject to a sales tax totaling 12% of the purchase price so your $45,000 will cost you an additional $5400 compared to buying the car in Alberta where the sales tax rate is only 5%, or $2250.
Supply and Demand Dynamics
The cost of a car also fluctuates due to supply and demand. If a particular make and model is extremely popular in your area, you might find a better deal by looking for the same car in a different market.
According to Car and Driver, Oregon has the lowest unexpected car fees, typically not exceeding $130 when buying a car. In contrast, California is known for its high initial car costs due to the high cost of living, a 7.25% sales tax rate, expensive car repairs, and high gas prices, making car ownership costly for many residents.
Pro: You Can Cast A Wider Net
Credit: Carvana
If you’re looking for a special model sports car or a vintage car, sometimes this necessitates looking beyond your state, especially for rare classics with a limited production run or specific models that are hard to find.
Looking at offerings in other states can greatly increase your chances of finding what you’re looking for. However, some caveats to keep in mind is that certain states are subject to different weather patterns which can impact the condition of a car.
In Canada, cars in the prairie provinces like Alberta are subject to cold, harsh winters where temperatures frequently dip below -30C/-22F. For any vehicle that’s parked outside for extended time, it can certainly result in more wear and tear. Likewise, cars found in the province of Quebec can be cheaper on average but road maintenance frequently uses liquid salt to melt road ice during winter, resulting in a far greater likelihood of rust developing on the undercarriage.
Pro: Online Shopping Experience
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Online platforms allow you to browse dealer listings conveniently from your desk. Technology has made it easier to connect with sellers quickly. For new cars, you can usually negotiate a deal over email while sellers can share photos and videos of their used car.
However, it’s important to be aware that the actual vehicle might look different if the seller is not entirely transparent.
Con: It’s More Complex and There’s More Work Involved
Buying a car out of state is more complex and involves more work. State tax laws vary, and especially for used vehicles, it’s crucial to get an inspection.
If you plan to pick it up in person and do a road trip, ensure you have insurance beforehand and that the car is registered, all of which need to be lined up beforehand.
Lastly, if you’re not keen to make that trip, or if the vehicle is straight up on the other side of the country, you might need to arrange for a car transport service to ship the car for you may save you from the potential aggravation of doing it yourself.
Shipping prices can vary based on distance and the type of vehicle. Credit: Nexus Auto Transport.
Hypothetically, someone living in Los Angeles who buys a car located in New York is looking at 2460 miles of driving. Bear in mind that’s another 2460 miles on your odometer and you know what they say: time is money. You might be better off getting a quote and be pleasantly surprised that it’s not as much as you think.
Con: The Total Cost Might Be More Expensive Than You Think
It’s not just the fact that states like Vermont have the lowest used car prices (on average) compared to Wyoming. Considering all of the above factors, looking at cars from another state might be a good deal for the vehicle along, but your savings will be offset but other factors such as sales tax, the logistics of getting it back home, and all of the tax/inspections that may be required before the car is eligible for registration.
Other Considerations
Inspect Used Vehicles
Credit: Car Salon
Whether you buy locally or out of state, make sure you do your due diligence. This includes getting a copy of the car history report and having inspections done by a reputable shop or mechanic. This greatly increases the likelihood of finding issues, which you can use to negotiate the price or walk away from a deal. The last thing you want is to buy a car sight unseen just to find out it’s total garbage and misrepresented.
Registration Fees and Taxes
Credit: Investopedia
Avoiding sales tax can result in significant savings when buying a car but it’s only possible in some states. Alaska, Montana, Oregon, Delaware, and New Hampshire have no statewide sales tax (also known as NOMAD states) and generally correspond to those with the lowest unexpected fees.
When buying out of state, you might be required to get an out-of-state inspection before the car can be registered. Check if you need to get an emissions test, also widely known as a smog check, as newer or lower-mileage vehicles may be exempt. Only certain counties may require these tests, so verify with your state’s DMV.
