Most and least expensive states for car ownership

Car ownership costs don't end with your monthly payment -- that's the starting point. In fact, the cost to own a car involves two sets of expenses:

1. Initial costs. Sales tax and document fees at the time of purchase

2. Ongoing charges. Registration, insurance, gas and maintenance.

These costs vary wildly, depending on your state, and they can really add up. Over a five-year period, the average car owner in Michigan could spend $10,596 more than her counterpart in Ohio. This article examines the primary cost factors, lists the least and most expensive states for car ownership, and offers cost-saving tips for drivers in all states. Click on the links below to jump directly to the information that you need:

10 most expensive states to own a car 10 least expensive states to own a car Ranking: most to least expensive states to own a car Sales tax and fees impact on car ownership Insurance impact on owning a car Gasoline cost impact on owning a car Vehicle maintenance impact on owning a car Vehicle registration impact on owning a car Factors affecting the cost to own a car

We calculated an average vehicle purchase price--basing it on the number of new versus used car purchases in 2015, and the average price of each, see below. The following factors were evaluated to determine car ownership costs over five years, by state:

10 most expensive states to own a car (over 5 years)

Due to generally higher than average auto insurance costs, gas and maintenance fees, it can be more expensive overall to own a car in the following states:

Our complete ranking of the most and least expensive states to own a car is below.

10 highest cost-per-mile states (over 5 years)

Drivers in some states spend more time behind the wheel than their counterparts in other states. Considering the total cost to own and operate a car over five years, and evaluating the average number of miles driven annually in each state, the following states have the highest ownership cost-per-mile:

Regardless of whether overall cost to own a car or average ownership cost-per-mile is considered, four states rank consistently among the most costly:

• Michigan

• Montana

• California

• Louisiana

10 least expensive states to own a car (over five years)

With an average U.S. car purchase price of $23,407, some states make owning a car easier on your wallet. Factors contributing to low-cost car ownership include: insurance, maintenance, gas, sales tax and registration.

10 lowest cost-per-mile states (over 5 years)

Interestingly, the average number of miles driven per year in low cost states was about 3,500 miles less than in high-cost states. The following states have the lowest ownership cost-per-mile:

Regardless of whether overall cost to own a car or average ownership cost-per-mile is considered, three states rank among the least costly:

• Ohio

• Wisconsin

• Delaware

Ranking: most to least expensive states to own a car

Sales tax and fees impact on car ownership

If you're lucky enough to buy a car in a state with no sales tax, you're way ahead of the game. Cars are big-ticket items, and between state and local taxes, transfer and document charges, you can spend more than ten percent of the purchase price on these line items.

To estimate the sales tax in each state, the 2015 U.S. weighted average car purchase price of $23,407 was assumed to be the car cost. Each state's sales tax percentage was then applied to the average vehicle cost.

Multiplying the U.S. average sales tax rate of 6.4% by the average car purchase price resulted in a $1,499 estimate for sales tax per vehicle. All state tax rates are listed below.

Sales tax rates by state (Highest to lowest)

Source: The Tax Foundation

Buying a car: Can you save on sales tax?

If you live in California, which has a fairly high sales tax rate, can you save by driving over the border to Oregon to buy your car? It depends. Most states impose some cost in lieu of sales tax (for example, a "use" tax) when you register your vehicle if you purchased it elsewhere.

There is a loophole in Oregon. You can register your car in Oregon, even as a non-resident, if you garage and use the car in Oregon. If you're in a position to do this, you might catch a break -- California does not impose a tax on cars bought in another state as long as they have been owned, licensed, and used in the other state for at least 90 days -- although vehicles with fewer than 7,500 miles must be certified to meet California smog regulations.

However, Washington, which also borders Oregon and has one of the highest sales tax rates in the country and cuts you no slack. If you're a Washington resident and buy a car in another state, Washington credits any taxes you paid in the other state toward the use tax you'll owe as a resident. If you buy in Oregon, with no sales tax, you get no credit and pay the entire Washington use tax.

Check with your state DMV. There may legally save on taxes if you buy your car in a neighboring state. If not, you'll have to grit your teeth and get out your wallet.

Insurance impact on owning a car

Insurance is often a big expense when you own a car, although it varies by state. Rates change when you move to a different area for at least four reasons:

1. Government-mandated coverage. Alaska's mandatory minimum liability coverage levels are twice Alabama's, for instance. Higher auto liability limits result in higher premiums.

2. Crime rates. If your state has lower property crime levels, your comprehensive insurance coverage may be less costly than in high-crime areas.

3. Population density. Crowded roads create high accident rates, affecting collision coverage costs.

4. Wildlife and weather. Areas prone to high winds or hail can increase property damage claims for windshield and paint destruction. Wildlife and livestock can cause expensive collision damage.

The difference between the lowest cost average auto insurance state, Maine, and the most expensive, Michigan, is more than $1,900 per year. Average annual car insurance premiums are shown below, listing states in order of highest to lowest rates.

Average insurance costs by state (highest to lowest)

Source, Insurance.com data

Saving on Auto Insurance

Auto insurance rates vary between drivers in the same state, even for drivers with similar records within the same demographic groups--age, neighborhood. Information is your best tool when looking to pay less for car insurance.

A car insurance coverage calculator can help you find the best deal on insurance, and understand how changing coverage, raising or lowering deductibles and adding services affects your costs. Be sure to take advantage of all auto insurance discounts that apply to your situation.

Gasoline cost impact on owning a car

Unless you drive a vehicle that runs on electricity or other alternative fuel, gas or diesel is a big part of your automotive cost. Your gasoline expense depends in part on where you live. States differ in the amount of tax they attach to each gallon of fuel. Gasbuddy.com tracks gas prices at local levels and reports statewide averages. The latest data (July 2016) was used to compare gas prices among states.

Fuel costs also depend on how much driving you do, and the type of car you drive. That varies by state as well, and the Federal Highway Administration tracks both the number of miles driven and the average miles per gallon (MPG) drivers get in each state. The table below shows the average spent on gas, by state.

Average gas costs by state (highest to lowest)

The difference between the amount spent on gas in the cheapest and most expensive state is about $2,343 a year.

Sources: Federal Highway Administration; Gasbuddy.com

Saving on Gas

Gas expense comprises miles driven, your gas mileage, and the price per gallon. Some sellers offer a discount if you pay with their credit card. Membership stores, such as Sam's Club and Costco, offer low gas prices to members as a benefit.

While you probably don't want to dump your current car based solely on its gas mileage, you may want to consider fuel-efficiency when you buy your next one-adding the extra charges for lower MPG vehicles when comparing total costs.

The other component, miles driven, is at least somewhat under your control. Alaskans, for example, have some of the highest per-mile costs because their gas prices are high. However, the Federal Highway Administration says that Alaskans drive fewer miles on average, and that keeps their gas costs down. In addition, driving fewer miles causes your car to hold its value better and depreciate less.

In California, mileage is a main rating factor. Insurers must calculate rates based on miles driven and driving record before considering your location.

Put yourself on a mileage "budget" per week and find ways to cut back-combining errands, carpooling, using public transportation when possible, and biking or walking short distances. Explore pay-per-mile auto insurance to cut costs on both gasoline and insurance.

Vehicle maintenance impact on owning a car

Costs for routine maintenance differ between states due to variances in labor costs, real estate prices and parts availability.

CarMD has an index comparing the average cost of a small repair-correcting a "check engine" light-between states. Applying the index for each state to the nationwide cost of annual maintenance, obtained from the American Automobile Association (AAA), yields an approximate maintenance cost for each state.

The difference between the least and most expensive state is about $160 a year--in lattes, that's two a month, not exactly a budget-buster.

Average maintenance costs by state (highest to lowest)

Source: AAA; CarMD

Saving on vehicle maintenance

A recent survey of AAA-approved repair shops disclosed that most drivers put off routine maintenance, including oil changes, tires and battery inspection/testing. Neglecting minor maintenance can lead to expensive breakdowns. Your best way to save on auto repair is not scrimping on routine maintenance.

Vehicle registration impact on owning a car

Auto registration costs are non-negotiable. If you want to live and drive in your state, you pay the price. The least-expensive states make this easy--$20 and you're done. Others charge hundreds, based on your vehicle's weight or value. These extra fees can at least be deducted on your federal taxes, if you itemize.

Average car registration costs by state (highest to lowest)

Sources: Department of Transportation; The Tax Foundation

Saving on car registration fees

You can't really save on vehicle registration once you have your car, but in states that charge according to the vehicle value or weight, you can select a car with fewer fees. Interestingly, many states charge extra to register vehicles that use electricity or alternative fuels. For example, Georgia's standard auto registration fee for gas-driven vehicles is $20, but it's ten times that for electric cars. The reason for this, according to the Department of Energy, is to make up for the gas taxes that owners of these vehicles don't pay-taxes needed to keep highways repaired.

Factors affecting the cost to own a car

The state in which you live has a profound effect on the cost of vehicle ownership. While some higher costs are often unavoidable, such as sales tax and registration, you do have control over others, including the number of miles you drive and the fuel-efficiency of the car you choose.

Because auto insurance represents one of the greatest costs of car ownership, compare car insurance quotes to obtain the lowest price auto insurance.

Save on auto insurance now

Methodology: average car price

Using 2015 data from [source TBA], 69% of cars purchased were used, at an average cost of $18,800. New cars represented 31% of total vehicle purchases, at an average cost of $33,500. A weighted average car price was calculated at $23,407.

The original article can be found at Insurance.com:

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