Money 101: Best State to Buy a Car and Car Insurance

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You want to save as much money as you can when buying a car. You need to make sure that you buy your car in the right place and at the right time.

There’s a lot to factor into the costs of a car. You have to think about the down payment, and trade-in value of your car, fuel efficiency, repairs, and insurance.

Did you know that there are also taxes, registration, and other fees on top of those things? They’ll vary from state to stay, which is why you need to know the best state to buy a car.

You could end up spending or saving hundreds of dollars just from buying a car across a border. Keep reading to learn which states are the best states to buy a car and how you can save money on your deal.

What Is the Best State to Buy a Car?

You have to know about the taxes and fees that you don’t really think about when you’re buying a car. States tend to charge a sales tax on a car purchase, and you want to limit that as much as possible.

Oregon doesn’t have a sales tax, while New York as a 4% sales tax on vehicles. There may also be an additional 4% in county and local taxes, too.

Colorado and Arizona are two other states that have high taxes on car purchases.

The price of a new car will not vary much from state to state. For used cars, the price of the car will also depend on where you live.

The cost of living and demand for certain types of cars are usually factored into the equation.

For example, look up the value of a Toyota Prius. You can look up the car and find that the trade-in-value is vastly different in Bethlehem, PA than it is in Portland, OR.

That’s because the cost of living is slightly higher in Portland, and there’s a greater demand for hybrid and electric vehicles in Portland. That drives up the value of the car.

Should You Buy a Car in a Low Tax State?

You need to weigh the total cost of buying the car, including transporting it. You may get a killer deal on a car in Oregon, but if you have to ship the car to Ohio, you might as well buy the car in Ohio.

On the other hand, if you’re in Northern California or in Washington State, it would make sense to buy a car in Oregon and then drive it home.

Can You Save on Registration Fees?

It depends on where you live and the motor vehicle laws in that state. You may find that that you can buy a car in one state, pay the registration fees to drive it off the lot in that state, and then have to fork over more money to register the car again in your home state.

Most states give you about a month to register a car from another state. Florida only allows 10 days, while Idaho gives you 90 days.

The car has to be inspected in order to get it registered, too.

Delaware is one of the rare exceptions because you can have a car registered in another state without having to re-register the car.

States charge registration fees using a few methods. One is a flat fee. Oregon charges a flat registration fee of $43. Other states will base the fee on the purchase price of the car and the age of the car.

Don’t Forget About Dealer Fees

Are you buying a car from a dealer? They can tack on an administrative fee to the purchase, which is called a dealer documentation fee.

The fee depends on the dealer and the state they operate in. Dealers used to be able to charge whatever they wanted and would add $1000 for handling paperwork.

States caught on and instituted caps to limit how much could be charged. These limits are usually around $100. In Pennsylvania, the documentation fee is no more than $138.

Shopping for Car Insurance

Now that you know the cost factors that go into taxes and fees in different states, let’s talk about car insurance. Here’s another cost of car ownership that will vary from state to state.

There are dozens of variables when it comes to car insurance and it doesn’t seem like any rhyme or reason as to why insurance premiums can fluctuate so much.

The average premium in New Jersey is over $1,600 a year. In Maine, it’s almost half that amount.

The truth is that states have laws that require how much coverage you need. They also have regulations that govern the insurance industry.

Plus, if there are high rates of accidents per capita in a state, that will drive up premiums along with the number of accidents involving uninsured drivers.

Then there are your personal factors, like your driving record, commute, and whether or not the car is in covered parking or you use street parking.

Shopping for car insurance is complicated because there are so many things to think about and consider. Check out some of the top tips to get the cheapest car insurance.

Big Names Aren’t Always the Best Option

You may be tempted to use an insurance company only because you know them. You know what the company is about and you’ve seen their ads on TV a million times. That doesn’t mean you should buy insurance from them.

It’s easy to overlook smaller companies, but they can provide better rates and better customer service. Make sure you look at all of your options when shopping for insurance.

Take Advantage of Discounts

Insurance companies offer a bunch of discounts for a number of reasons. You can get a discount if you’re a good driver with a clean history.

You can get more discounts if you agree to an automatic payment each month or you pay your premium in full. Discounts are given if you have more than one policy with the insurance company.

There are discounts for belonging to a trade group or association, such as an alumni association.

Your Credit and Insurance Premiums

Believe it or not, there’s a link between your credit score and your insurance premiums. About 95% of auto insurers will use a credit score when figuring out rates.

The industry says that there’s a link between people with lower credit scores and their likelihood to get into an accident or file a claim, making them a greater risk to the insurance company.

If you have a high credit score, you can expect to see a lower premium. Get your credit score up by paying off your credit cards and loans. You also need to make these payments on time.

Buying New vs. Used Cars

Buying a new car means you’re paying for a lot of things, such as depreciation. The car has a high value, even though you lose some of that value when you drive the car home from the dealership.

The car is still costly to replace compared to a used car. That’s why your insurance premium will be much higher for a brand new car than for a used car.

If you’re shopping for a new car, you’ll want to get quotes on insurance premiums before you finalize the deal. Some car models are more expensive to insure than others. Insurance carriers have data on the types of cars that attract break-ins and accidents.

Pay-Per-Mile Insurance

Do you work from home and just need a car for errands and short trips? You could opt to have a pay-per-mile or another type of usage-based insurance.

This is good to have if you don’t make many trips or you only have a car to make grocery shopping easier. It could save you a lot of money in the long run.

Where Should You Buy Your Next Car?

Where you buy a car can have a big impact on the total cost of the car. What’s the best state to buy a car? Of course, it depends on a number of factors.

When you add up taxes and fees, Oregon seems to come up again and again as a great place to buy a car. It only makes sense to buy a car there if you’re in a neighboring state and not too far from the state border.

At the very least, you need to be aware of all of the fees and other costs that are associated with a car purchase. You’ll be able to come up with a budget that’s appropriate without any last-minute surprises.

Do you want more tips to save money? Check out this site often for more great articles.