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The Most Expensive States to Own a Car

Education | 07/02/2023 18:29

Let’s face it: owning a car is expensive. From buying your car to insuring it and paying for gas, the price tag on owning a car is only getting higher. For the first time ever the average annual cost of owning a car broke $10,000 in 2022 according to the Bureau of Transportation Statistics. This represents nearly a 20% price increase in car ownership over the past decade. But it is more expensive to own a car in some places than others, and there are a lot of reasons for this variance.

These are the most expensive states to own a car.

What costs are associated with having a car?

When we talk about the costs of car ownership we are talking about a lot of different factors. 

The car’s price

When we think of car ownership, the main cost we think about is the car itself. Car payments make up a large part of our monthly transportation expenses. These payments are based on the total price of the car and the interest rate that you are offered. 


Auto insurance is required in almost every state. The specific requirements and the cost of insurance vary greatly depending on where you live. A big part of this difference has to do with the likelihood of accidents. Areas with high populations will have higher rates as the density makes the likelihood of accidents increase. Other factors include:

  • Crime rate

  • Occurrence of natural disasters, such as tornadoes and hurricanes

  • Cost of living

The other major factor that varies by state is what coverage is required. Almost all states require liability coverage, but other coverage requirements such as uninsured/underinsured motorist (UM/UIM) coverage and personal injury protection are only required by some states. This can greatly affect the insurance premium you have to pay.

Maine offers the lowest rates in the country with an average premium of $696 according to the Insurance Information Institute. Compared to Michigan, which has the highest premiums in the country at $3,785 per year, this is a huge difference.


The price of gas is another major variable from state to state. Gas price varies for two main reasons: different state tax rates and the proximity to oil refineries and pipelines. Gas prices change often and are one of the most variable expenses for a driver. According to AAA the average driver paid $.18 a mile for gas in 2022, totalling about $2700 per year. The cost of gas however is very dependent on the type of car you drive and how often you drive.

Mississippi, Louisiana, and Tennessee have the lowest gas prices in the country in 2023 while Washington, California, and Hawaii have the highest gas prices.

Maintenance and repairs

Maintenance and repairs are inevitable costs of car ownership. Maintenance such as oil changes, tune ups, and new tires can add up to a lot of money every year. For a new car AAA estimates that owners spend about $121 per month on maintenance and repairs. 

Registration, fees, and taxes

Registration, fees, and taxes vary significantly from state to state. The average car owner spent $675 in 2022 to legally drive their car according to AAA. 

Registration fees are lowest in Arizona, Mississippi, and Nebraska, all of which charge less than $15 to register a car. The highest registration fees belong to North Dakota ($274), Montana ($225), and Florida ($225).

Fees associated with buying a new car vary from state to state and even from dealership to dealership. These fees may include origination fees, destination charges, advertising fees, and more. On average Oregon has the lowest fees when buying a new car, with the average buyer spending about $130 in extra fees.

State tax rates vary widely, with Alaska, Delaware, Montana, New Hampshire, and Oregon all boasting 0% sales tax, while California has the highest state sales tax rate at 7.25%.

Are car prices different in each state?

New cars have similar prices from state to state but the registration and taxes will vary significantly. The price of used cars however can vary significantly from state to state based on a number of factors such as supply and demand and registration requirements.


What states is it most expensive to own a car in?

So which states have the highest cost of car ownership? According to a March 2023 study from Forbes, the following states have the highest and lowest cost of car ownership. Forbes looked at gas prices, car repair costs, insurance rates and monthly auto loan payments to determine their rankings.

California and Nevada have the highest cost of car ownership. 

California has the second highest price of gasoline ($4.76 per gallon), the third highest cost for repairs and maintenance ($415.66), and has the eleventh highest cost for full coverage insurance.


Nevada has the third price of gasoline ($4.24 per gallon) and has the sixth highest cost for full coverage insurance ($3,342 annually).


Colorado, Florida, and Alaska are next in line as the most expensive states for car ownership.


Ohio has the lowest cost of car ownership.

Ohio has the lowest cost of car ownership in the United States. With an average annual insurance premium of  $1,112, average car payments of $500, and an average gas price of $3.17 per gallon, it’s the most affordable state to own a car. 


Iowa, Wisconsin, New Hampshire, and Maine round out the list of the least expensive states for car ownership.


How can I reduce the cost of car ownership?

If you live in a state where it is expensive to own a car, you may be wondering how you can reduce the cost of owning a car. While you could move to Ohio or Iowa, that’s probably not a realistic option for most. But the good news is there are a number of steps you can take to reduce the cost of owning a car. 


Cut down on gas usage.

One of the biggest things that you have control over at any given time is the amount that you drive. While you may have a commute that you cannot control, you can cut down on unnecessary trips by combining errands, carpooling when possible, and walking or riding your bike if that is an option.



Shop around for insurance.

You can change your car insurance whenever you want, not just when your policy is up for renewal. It’s worth the effort to look around and see what other companies may offer competitive coverage in your area. Contacting your existing company and inquiring about discounts and promotions may also help you save some money on insurance. 



Do your research when buying a new car.

When you buy a new car, consider all of the costs that you will have to pay. Selecting a car that is reliable and does not need as much maintenance can save you a lot of money and hassle. A car with good gas mileage will also help you to save thousands every year if you are a high mileage driver.

Negotiate fees and APR when buying a new car.

When you are buying a new car you should also shop around for the best car loan possible. Comparing APRs and fees across lenders and dealerships will be more work for you but it will result in big savings. When you close, be sure to negotiate the dealer fees. Some fees can be reduced by the dealer while others are mandatory, but negotiating will help you to keep your overall car cost as low as possible.

Refinance your car loan.

If you already bought your car, you may be wondering how you can reduce the cost of car ownership. The good news is that you are not tied to your lender until your car is paid off. Refinancing your loan will help you to reduce the APR that you are paying, and this can result in thousands of dollars in savings every year. Refinancing is simple when you use a company that specializes in auto loan refinance. Auto Approve can help you determine which lender is right for you and help you to negotiate the best APR possible .

Refinancing your car loan will be most effective when your finances are in good shape. Taking the time to work on your credit score and pay down debts will help you to secure the best car loan terms.

Those are the most expensive states to own a car.

Unless moving states is in the cards for you, you will have to resort to other ways to reduce the cost of car ownership. Buying a reputable and gas-conscious car, cutting back on gas use, and refinancing your car loan are a few of the most effective ways to reduce the cost of owning a car, no matter where you live.

If you are paying too much on your car loan, consider refinancing your car loan with Auto Approve. It’s free to get started and couldn’t be easier. So what are you waiting for?



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