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SmartAsset: Cheapest States for Car Owners - 2022 Study

Many Americans choose to buy used cars as a cost saving mechanism rather than investing in a new vehicle. In fact, in 2020, over 40 million used cars were sold in the U.S. compared to 14.6 million new cars. But even with a used vehicle, the first year of car ownership can be a pricey endeavor when factoring in purchase costs as well as recurring costs.

In this study, SmartAsset crunched the numbers to find the states where the first year of car ownership is most affordable. With used car sales occurring roughly 2.5 times more than new car sales annually, we focused on the associated costs for a used car. We considered six metrics to calculate our ranking: upfront costs (estimated 10% down payment and registration fees) and annual recurring costs (loan payment, auto insurance, gasoline spending, and maintenance & repair costs).

Though our estimates are comprehensive, they do not account for car costs that are unexpected or specific to the car owner. Below we also discuss additional costs that may come up when owning a car. For more information on our data sources and how we put all the information together to create the final rankings, read our Data and Methodology section below.

Key Findings

  • Residents in four states can expect to pay less than $10,000 in first year car ownership costs. These states include New Hampshire, Ohio, Iowa, and Virginia. Additionally, in 30 states, car owners can expect to pay less than $11,000 in the first year. Wyoming is the only state that exceeds $12,000.
  • Four Midwest states rank in our top 10. They include Ohio, Iowa, Indiana and Nebraska and in all four states, we estimate that the first year of car ownership amounts to less than $10,300.
  • With gasoline prices continuing to climb nationwide, residents in 18 states can expect to pay over $2,000 per year on gas. Nationwide, the average price for a gallon of gas was up to $3.44 as of January 2022, the highest it has been since 2014. Of the top 10 states in our study, Indiana is the only state that exceeds $2,000 in annual gasoline spending.
  • Two states that do not charge sales tax rank in the top 10. Of the five states do not charge sales tax, two of them – New Hampshire and Delaware – rank among the 10 most affordable states for car ownership. 

Image is a map by SmartAsset titled "Top 10 Most Affordable States for First-Year Car Ownership Costs."

1. New Hampshire

This New England state topped the list with the most affordable first year of car ownership costs, according to the six metrics we considered. The average first year cost of car ownership is $9,754. As residents in this state benefit from no state sales tax, a 10% down payment on the average used car in the state ($24,104) amounts to $2,410. Additionally, yearly gas spending ranks third-best in our study at $1,486.

2. Ohio

In the state that was home to the famous Wright brothers, pioneers of aviation transportation, Ohio ranks second for another mode of transportation: motor vehicles. For first year car ownership costs, the state has the lowest average annual maintenance and repair costs ($342). Additionally, it ranks second-best for upfront costs ($2,387) and third-best for annual car loan payment ($4,546).

3. Iowa

The second Midwestern state to make the top 10, Iowa’s average first year car ownership cost is $9,894. In a year, an Iowa resident can expect to pay the least for auto insurance ($629), which translates to 1.02% of the annual median household income. Other recurring costs are also low. The average annual loan payment is $4,680 (seventh-lowest) and average maintenance and repair costs are $353 (sixth-lowest).

4. Virginia

At $9,987, Virginia is the last state in our study to boast first year ownership costs below $10,000. The Old Dominion state also ranks fourth-best for both upfront costs ($2,397) and annual loan payment ($4,553). For other annual costs, Virginians can expect to pay about $1,800 on average for gasoline annually and about $849 for auto insurance.

5. Indiana

We estimate that the first year of owning a car in Indiana costs around $10,250. This Great Lakes state ranked in the top 10 across four out of six metrics: lowest for the upfront down payment and registrations costs ($2,371), second-lowest for annual loan payment ($4,541), fifth-lowest for maintenance and repair costs ($352) and sixth-lowest for auto insurance ($737).

6. Pennsylvania

A state where the law prohibits car sales on a Sunday, residents of Pennsylvania can expect to pay $2,527 upfront on a used vehicle car purchase with an annual loan payment of $4,812. Another annual cost: gasoline will cost an average of $1,585 annually, which ranked fourth for that metric in our study. In total, the first year of car ownership costs $10,273 in this Mid-Atlantic state.

7. Nebraska

Another Midwestern state that made the top 10 in our study boasts a first year car ownership cost of $10,289, according to our estimates. For a used car, it will cost on average $23,725. Nebraska also ranked seventh-best for annual auto insurance costs ($746). For other annual recurring costs: residents of Nebraska can expect to pay $4,837 on their loan, $1,818 for gasoline and $369 for maintenance and repair.

8. Delaware

One of the five states without a sales tax, Delaware ranked in the top 10 not just for overall first year car ownership costs ($10,293), but also has the lowest annual loan payment ($4,536), third-lowest upfront costs ($2,387) and fifth-lowest estimated annual gas spending ($1,598). However, when it comes to annual auto insurance costs Delaware ranks in the bottom fifth of state, with an average cost of almost $1,400.

9. Vermont

Vermont, the second New England state and second-least populated in the U.S., ranks fourth-best for annual auto insurance costs ($699) and eighth-best for annual maintenance and repair costs ($357). Annual auto loan payments ($4,923) are the highest of the top 10 states in this study. On average, the annual gasoline cost is $1,726. Overall, residents of Vermont can expect to pay roughly $10,330 in their first year of car ownership.

10. Kentucky

Known as the home of the American sports car, Kentucky is the final state in our top 10. We estimate that the first year of car ownership will cost an average of $10,357. This state ranked seventh-best for upfront costs ($2,458) and ninth-best for annual loan payments ($4,711). Driving will run a Kentucky resident $1,910 on average in gasoline and they can expect to pay $378 in maintenance and repair costs in the first year of ownership.

Image is a table by SmartAsset titled "How Much Does the First Year of Car Ownership Cost in Each State?"

Additional Car Ownership Costs

Apart from the six metrics we examined, owners may need to pay for several other car-related expenses. Though we accounted for registration fees, some localities and dealerships also charge emissions testing fees and delivery charges.

Maintenance costs can also vary significantly depending on the age of the vehicle and it is important to have regular check-ups to keep your car well maintained. Paul Sherman, an auto expert from, says that “by having annual maintenance on your car, you can detect potentially costly problems before they become catastrophic” and subsequently keep costs down.

Finally, car owners should also account for traffic and parking tickets, towing costs, and roadside service plans when planning out their budget. Additionally, you could experience expenses caused by forces outside of your control like vandalism, theft or even weather events such as hail and falling debris. Finally, with over 6 millions car accidents occurring yearly, there could be unexpected costs that arise depending on the severity of the damage and it is important to have an emergency fund should such costs arise.

Data and Methodology

To determine the average first year cost of owning a car in each state, we looked at data on all 50 states. SmartAsset compared the states across six metrics spanning two categories:

  • Upfront costs. For our upfront costs category, we looked at two metrics: down payment amount and state registration fees. We assumed a 10% down payment on the average used vehicle cost and sales tax in each state. Data comes from, and the National Conference of State Legislatures (NCSL).
  • Annual recurring costs. This consists of a calculated loan payment, auto insurance, average gasoline spending and first year maintenance and repair. We assumed a 72-month loan with a 5% interest rate. Data comes from Census Bureau’s 1-year 2019 American Community Survey, Kelley Blue Book (KBB), Environmental Protection Agency (EPA), AAA, Experian, Insurance Research Council, and CarMD.

Total costs in each category were added together to calculate the final first year of ownership cost. States were ranked in ascending order according to the first year cost.

Tips for Keeping Car Ownership Costs Low

  • Compare car insurance prices. According to Laura Adams, personal finance expert with, a key way to cut car ownership costs is “regularly shopping and comparing auto insurance quotes.” In doing so, buyers can evaluate premiums and deductibles for each plan, and evaluate the level of risk at which they are comfortable.
  • Manage your budget. Vehicle expenses can strain your wallet in addition to all of life’s other expenses, but you can mitigate the impact with budgeting. Our budget calculator can give you a clear picture of your current spending but also visualize the next six months and show you where cutting back on excess expenses can maximize your savings.
  • Work with a professional. If you’re looking to make a new purchase and need extra support to manage your finances, SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.

Questions about our study? Contact

Photo credit: © iStock/Hispanolistic

Anja Solum Anja Solum is a data journalist at SmartAsset covering a variety of personal finance topics, including retirement and debt management. Before joining SmartAsset, she worked on both agency and in-house content marketing teams where she developed her love for data analysis and visualization. In her free time, she nurtures a passion for gaming, a recent addiction to anime & KDramas, and a mischievous labrador retriever. A bit of a nomad, she’s lived in Norway, Jamaica, and Denmark in addition to the U.S. but now resides in Raleigh, North Carolina.
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