Buying a car in the US sounds simple until you’re actually doing it. One minute, you’re excited about your first set of wheels. Next, you’re wondering if you’ve found the right price. So it makes sense that many newcomers ask the same question: “What’s the cheapest state to buy a car in 2026?”
That’s where we come in. At Remitly, we spend a lot of time helping people navigate financial decisions in a new country, and we know how easy it is to feel unsure when the rules aren’t familiar. This guide walks you through which states tend to be cheaper, why some “great deals” aren’t actually great, and how to decide if crossing state lines is worth the effort.
The “out-the-door” price factor
If there’s one term worth remembering when buying a car in the US, it’s this one: out-the-door price. It sounds fancy, but the idea is simple. It’s the final number you pay before you can, quite literally, walk out the door with your new car keys.
The total typically includes the sticker price, sales tax, dealer documentation fees, and the title and registration costs. This is the number that matters, not the price you spot on the windshield or the monthly payment someone quotes you first. The out-the-door price is where you can really tell if you’re getting a good deal or not.
The sales tax detail many buyers miss
You usually pay sales tax based on where you register the car, not where you buy it. So even if you find a great price in another state, your home state’s tax rules may still apply when you bring the car back. This catches many newcomers off guard, and honestly, it’s not obvious unless someone tells you.
That’s why the cheapest state to buy a car in 2026 isn’t always the one with the lowest taxes.
In many cases, the real savings come from things like lower dealer fees or more competitive pricing due to high inventory. When you focus on the out-the-door price, comparing which US state is cheaper gets a lot clearer.
States with the lowest documentation fees
Dealer documentation fees are one of those car-buying costs no one really talks about until they show up on the bill. They’re meant to cover the paperwork, but the amount can vary quite a bit depending on the state.
Why documentation fees matter more than you think
In some places, these fees are tightly regulated. In others, dealers can charge whatever they think the market will tolerate. And yes, that can mean hundreds of dollars.
So, if a dealer charges $600 for paperwork, most of the time there’s no way around it, even if you negotiated a great sticker price. That’s why states that cap documentation fees by law can be some of the cheapest places to buy a car.
For example, California currently caps dealer documentation fees at around $85, although this is potentially set to rise. Oregon, South Dakota, and Arkansas have kept them around a similar rate, in recent years, under $115.
States where documentation fees can be much higher
On the other hand, some states don’t cap documentation fees at all. In places like Florida or Virginia, doc fees can approach, or even exceed, $1,000 depending on the dealer.
That doesn’t automatically make buying a car in these states a bad idea. In fact, lower sticker prices or higher inventory can still make the deal worthwhile. It just means documentation fees are something you’ll want to factor in so they don’t catch you off guard.
The “no sales tax” states
If you’ve ever searched for the cheapest state to buy a car, you’ve probably come across lists celebrating “tax-free” states. It sounds like a dream scenario at first glance. There are five states with no statewide sales tax: Alaska, Delaware, Montana, New Hampshire, and Oregon.
Why most buyers still pay sales tax anyway
Buying in one of these places might feel like you’ve cracked the system. But there’s a catch. In most cases, you pay sales tax where you register the car, not where you buy it. So, if you live in a state that charges sales tax, you’ll likely owe that tax when you bring the car home.
This isn’t a trick or loophole being closed. It’s simply how US vehicle registration works, and it applies to most buyers.
When no-sales-tax states do help
There are some situations where buying in a no-sales-tax state really can save you money. For example, if you’re moving to that state and plan to register the car there, or if you already have legal residency and a local address in that state.
If that’s your situation, buying locally in one of these states could significantly lower your total cost. If not, it’s still worth understanding how the system works. Either way, knowing this upfront helps you avoid chasing a deal that looks amazing on paper but doesn’t quite hold up once registration comes into play.
Your residency and paperwork can affect where it makes sense to buy
Before you start planning a road trip for a “too-good-to-miss” deal, there’s one more piece of the puzzle worth checking: your residency and paperwork.
What dealers usually need to complete a sale
In the US, car dealerships typically require a few basics to complete a sale. This usually includes a valid driver’s license, proof of insurance, and a residential address.
If you’ve moved recently, are still settling into a new state, or haven’t updated your documents yet, this can affect how easy it is to buy out of state. It doesn’t mean you can’t do it; it just means expectations and requirements can vary.
Why buying out of state may take an extra step
Some dealerships are more comfortable selling to out-of-state buyers than others. A few may limit financing options or ask for additional documentation if your license or address doesn’t match the state where you’re buying.
This is especially common if you’re financing the car rather than paying in full. A quick conversation with the dealer can confirm what documents they need and whether they regularly work with out-of-state buyers.
High-inventory states
Car prices, especially for used vehicles, are heavily influenced by supply and demand. In states where there are lots of cars for sale, dealers often price more aggressively to stay competitive. More options usually mean better deals for buyers.
Large states with major cities often have this advantage. Places like Florida and Texas tend to have huge used-car markets, which can push sticker prices down. Even if dealer fees are higher in these states, the lower starting price can still make the overall deal attractive.
Regional pricing patterns worth knowing about
There are also regional trends that can work in your favor. In parts of the Midwest, trucks and SUVs are often more affordable simply because they’re so common. In warmer southern states, convertibles and sports cars may be easier to find, and sometimes cheaper, during the winter months, when demand dips.
This doesn’t mean one state is always cheaper than another. It means flexibility helps. If you’re open to buying the same model in a different region, you may find meaningful savings without giving up what matters to you.
Cheapest upfront isn’t always cheapest long term
It’s tempting to focus only on the purchase price. But when you’re deciding where to buy a car, it helps to think one step further.
Ongoing costs can vary by state
Some states are cheaper at the moment of purchase but more expensive over time. Insurance rates can vary significantly by location. Registration renewals, emissions testing, and inspection requirements can also add up depending on where you live.
For example, a car bought cheaply out of state might cost more to insure once it’s registered at home. Or it may require inspections or upgrades you didn’t anticipate.
Calculating the real “trip cost”
Once you’ve found a tempting out-of-state deal, it’s time to ask yourself, “What will it actually cost me to get that car home?” It’s easy to focus on the car price and forget the rest. But travel costs can quietly eat into your savings if you don’t factor them in early.
Before committing, it helps to do a quick, honest cost check. Most out-of-state purchases include some version of the following:
- A one-way flight or a long drive to pick up the car
- Gas for the drive home
- A hotel stay if the trip can’t be done in one day
- Meals on the road
- Time off work or lost income
A simple rule of thumb
If your total savings aren’t at least $500 to $1,000 after travel costs, buying locally is often the easier and safer choice. Not because out-of-state buying is risky, but because your time and peace of mind are worth something too. For many newcomers in the US, avoiding extra paperwork, long drives, and unexpected delays can be just as valuable as saving a few hundred dollars.
Is traveling to buy a car worth it in 2026?
So, where is the cheapest state to buy a car in 2026? The honest answer is: it depends. The best deal usually comes down to a mix of factors, including a competitive sticker price, reasonable dealer fees, sales tax rules where you live, as well as travel costs and logistics.
For some people, buying out of state can lead to real savings. For others, the best choice is closer than they think. Neither option is “right” or “wrong.”
We know that buying a car is a big step, but with a little planning, it doesn’t have to feel overwhelming. And if you’re trying to work out the costs of living in a new country or sending money home, Remitly is here to help.
FAQs
Do I pay sales tax where I buy the car or where I live?
In most cases, you pay sales tax where you register the car, not where you buy it. Some states have agreements that simplify the process, but for most buyers, your home state’s tax rules apply.
Is it hard to register an out-of-state car?
Not usually. Registering an out-of-state car is a standard process at the DMV. It does involve paperwork and a visit in person, but thousands of people do it every day.
Does buying a car in a cheaper state affect the warranty?
No. Manufacturer warranties are valid nationwide. Whether you buy the car across town or across state lines, your warranty follows the vehicle.
Can I drive the car home without license plates?
Yes, in most cases. Dealers typically provide temporary tags, which allow you to legally drive the car while you complete registration at home.