Are Cars Cheaper In Texas? Not cheap at all and this is why


Are you planning to migrate to the Lone Star state, or are you a Texas resident looking to buy a car and needing some advice? Insurance companies do comprehensive studies of all aspects of car ownership to offer risk cover. I looked at the data published by leading insurers in the United States to help gain a better understanding.

The cost of buying a car in Texas and owning a car in Texas is quite different. Gas prices may be lower in Texas, but other costs such as state taxes and insurance can vary greatly. A recent analysis ranked Texas as the 15th most expensive state for car ownership.

Texas is second in size only to California. Texas ranks among the fastest-growing states in the United States, and for a good reason. An affordable cost of living, temperate climate, promising job market, and plenty to see and do make Texas a win for newcomers. You will need a vehicle to help you explore this beautiful state. Let us examine the issues affecting the cost of buying and owning a car in Texas.

Street with car lots

Are Cars Cheaper To Buy In Texas?

Whether you are considering buying a new or used car in Texas, cast your search as wide as possible by doing an internet search.

Cars produced in Texas can hold some significant price advantages for prospective buyers. The local manufacturers can offer a more extensive selection of their models from their stockyards and do not have the transportation costs. They are thus able to provide their models at better prices.  Texas is home to two major passenger vehicle assembly plants, General Motors, and Toyota.

Doing your homework online can save you a lot of money buying a new or used car in Texas. There are other factors to consider than the sticker price, however. Shop around and be willing to travel to secure the best deals. The cost of buying a car in Texas ranks at 15th most expensive state out of the 50 states in the U.S.

Other Costs To Consider When Buying A Car In Texas

The sticker prices of new and used cars can vary widely within Texas. Cities with a higher average standard of living will be more expensive than rural towns. Other factors to consider buying a car in Texas are:

Insurance costs – Texas drivers spend an average of 2.70% of their annual income on car insurance, higher than the national average of 2.44%. In cities like Dallas and Houston, insurance can cost up to 15% more than smaller cities and towns. Here are some significant factors that influence car insurance rates in Texas:

State government-mandated coverageTexas law requires you to have at least $30,000 of coverage for injuries per person, up to a total of $60,000 per accident, and $25,000 of coverage for property damage. This type of insurance is called 30/60/25 coverage.

Crime rates – Texas rates 17th highest in crime rates, slightly higher than the national average. Insurance premiums are higher due to the higher vehicle theft risk in Texas.

Population density – Texas is a vast state with sparsely populated areas, but the big cities have high population density. Cities like Dallas and Houston have fast-growing populations.

Natural disastersTexas is ranked first in the United States in the variety and frequency of natural disasters. Flooding, wildfires, tornados, hurricanes, hail storms, sinkholes, erosion, and drought occur in the state. Sometimes, even utilizing the state’s natural oil, gas, and water reserves can lead to subsidence and earthquakes.

Emissions standards – California has the highest emission standards of any state in the U.S. Texas, by contrast, has some of the lowest emission standards. If you are buying a car from out of state, the chances are that you will not be required to have any expensive conversions done to comply with Texas emission standards.

Registration – Even though Texas is the second most populous state in the U.S., vehicle registration’s cost ranks well outside that required in the top 10 states with the highest registration costs. At $51.75, the cost of registration in Texas is below the national average of $53.69.

Sales tax – Sales tax is typically payable in the state where you register your car. In Texas, a sales tax of 8.25% is on the sales price, slightly higher than the national average of 7.42%.

Transporting the car to Texas – If you are looking to buy outside the state of Texas, be aware that you will need a temporary registration to drive the car back to Texas. Alternatively, you could ship it through a reputable auto transport company. Many dealers have close relationships with shipping companies. This cost can be considerable and must be taken into consideration.

Running Costs – Texas has one of the lowest gasoline costs in the United States, dramatically impacting the cost of operating your vehicle. Service and repair costs also play a role in determining the running costs of the vehicle.

Toyota Showrooms

A survey conducted in July 2021 by the Insurance Industry revealed the following findings.

The ten most expensive states for car ownership over a five-year period:

  1. Wyoming – $36,106
  2. California – $30,987
  3. Louisiana – $30,793
  4. Michigan – $30,556
  5. Oklahoma – $30,433
  6. Arkansas – $28,448
  7. Georgia – $27,718
  8. Texas – $27,562
  9. New Mexico – $27,347
  10. North Dakota – $27,021

The ten least expensive states to own a car over a five-year period:

  1. New Hampshire – $19,749
  2. Wisconsin – $21,074
  3. Massachusetts – $21,196
  4. Ohio – $21,384
  5. Vermont – $21,737
  6. Maine – $21,994
  7. Oregon – $21,997
  8. Hawaii – $22,623
  9. Alabama – $22,750
  10. Alaska – $22,766

Conclusion:

Considering all the factors contributing to the cost of buying and owning a car in Texas, research by the vehicle insurance industry indicates that Texas ranks in the top most expensive states. If you are looking to buy a new or used vehicle, there are significant savings by looking for the best deals online. Online dealers often have extensive inventories and offer great deals, including getting the vehicle delivered to you.

Texas has one of the lowest gas costs in the U.S. Take advantage of this and ensure that your vehicle is always well maintained to provide the best fuel consumption. Ensure that you have adequate insurance to cover the risk of accidents or theft.

Before buying any used vehicle, it’s always worth investing a few dollars to check the VIN number against the vehicle database. An audit with a company like VinAudit (links to VinAudit) will guard against Mileage fraud, Salvage rebuilds, Title washing, Vin cloning, and a ton of other uglies.

You may find the following posts helpful:

Is CarMax cheaper?

Are Hertz cars good to buy?

Why is Cadillac so cheap?

Are Lexus expensive to maintain?

Are Mercedes expensive to maintain?

CarMax vs dealer

Are Carvana prices good?

John Cunningham

John Cunningham is an Automotive Technician and writer on Rustyautos.com. I've been a mechanic for over twenty-five years, and I've worked for GM, Volvo, Volkswagen, Landrover, and Jaguar dealerships. My passion is cars. I use my knowledge and experience to write articles that help fellow gear-heads with all aspects of car ownership, including buying advice, maintenance, and troubleshooting.

Recent Posts