What is The Cheapest State to Buy RV and Why?
The prices of items can vary due to supply and demand. However, prices for things like real estate and RVs can vary for other reasons, as well. This means that you can save quite a bit of money going across state lines to buy an RV or purchasing an RV in another state while you’re traveling. But what is the cheapest state to buy RV in? And why is there such variation in prices for RVs between states?
What are the Differences between States that Cause RVs to Vary in Price?
A. Registration fees
Registration fees vary from state to state. For example, Texas charges less than a hundred dollars to register a vehicle. That’s due every year. The title registration charge is only due once when you buy it, and it is similarly low.
These costs are several hundred dollars less than you’d pay to buy and register a car or RV in Oklahoma. This is why many cars and RVs in Oklahoma have Texas tags.
B. Sales Tax
In the United States, the federal income tax is constant, but states can implement their own income tax. Some states have a property tax. Nearly all states have a sales tax. Yet each state has its own combination of the three. Furthermore, cities and counties can levy their own sales taxes, too, in addition to the state rate.
This means that the sales tax rate on an RV can range from zero to ten percent or more. That really adds up whether you’re looking at a 10,000 dollar used trailer or 50,000 dollar luxury RV.
Note that you pay the sales tax rate of the location where you buy the RV, not the place where you live.
C. Insurance regulations
If you want to be allowed to drive the RV off the lot, it needs to be insured. When you’re renting an RV, it is generally covered by your auto insurance. Buy the RV, and you have to add it to an auto insurance policy. The average cost ranges from one to two thousand dollars, though the price varies based on the cost of the vehicle and associated risk.
A class C RV often costs just a thousand dollars a year to insure. It is cheaper, so the replacement value is lower. It is also built onto a truck chassis and engine, so it is the easiest to drive. You’re less likely to get into an accident with it, since you can park it in familiar parking spaces.
A class B camper van can be parked in larger SUV parking spaces and drives like a truck. This means it is easier to store and less likely to be damaged than a Class A RV.
The long, tall and heavy Class A RV is the most likely to be damaged when you park it or drive under a bridge. Then there’s the fact that they are worth much more and harder to repair.
This is why a basic, Class C RV costs at least two thousand dollars to insure.
Get collision insurance and car insurance
If you choose to get collision insurance and car insurance that covers the damage caused by thieves and vandals, you’ll pay much more than this. If you don’t care about repairing the vehicle to a like-new condition, then you’ll pay less.
This is a side benefit of buying an older, used RV. If you can pay cash for the used or small RV, you won’t be legally obligated to have a higher level of insurance coverage to protect the value of the vehicle.
Auto insurance won’t cover the inside value
Know that auto insurance won’t cover the value of items inside the RV that could be stolen. This means you need property insurance to cover the damage or loss of a generator on your trailer or laptops and other valuables stored inside the RV.
The cost of auto insurance depends on where you live, while property insurance rates are based on where the RV is driven and stored.
D. Market value
The market value of the RV directly impacts the insurance rates you’re charged. You’ll also find that the market value of the RV is dependent on local demand. The price of RVs rises along with spring temperatures.
Go up north where it is still snowing, and you’ll be able to buy the same model of RV much cheaper than you would down south. The fall sales come sooner up north, too.
Avoid areas where a lot of people live in RV
RVs are also worth more and cost more new in areas where a larger percentage of the population lives in them full time. If you are visiting or live in a city with a large number of “snowbirds” who stay for several months out of the year, RVs sell for more at the start of the season than they would a hundred miles away.
On the other hand, you’ll have a much broader selection of used RVs at the end of the season when people decide to leave. Some will decide that for financial, medical or personal reasons, they’d rather just sell the RV and fly home.
Migrant or mobile workers live in RVs
Another population that lives in RVs are migrant or mobile workers. For example, at the end of the Christmas shipping season, the Amazon warehouse managers see a parade of tail lights as these seasonal workers move on to their next gig.
Any area that has a massive influx of temporary or seasonal workers will see prices spike due to demand – people looking for somewhere to live will often buy trailers to have a home.
What are the Cheapest States to Buy RV and Why? Here are 8 States in Our List
Montana doesn’t have a state sales tax, and cities and states don’t have a sales tax, either. The state is also unusual for allowing outsiders to register vehicles there, whereas most states require you to register the vehicle at the location of your primary residence.
This means you can avoid paying sales tax on the cost of the RV. Then there is the Montana LLC Car Registration Loophole.
This can make Montana the cheapest state to buy an RV in, if you are willing to pay for an LLC to be created. We’ll get more into that later.
02. South Dakota
South Dakota has low registration fees. The state has a low sales tax rate, as well. Nor does the state levy a personal property tax; these can add several percent to the purchase price of an RV.
Wyoming’s sales tax rate ranges from four to eight percent. The state doesn’t have a personal property tax. One point in favor of this state is that it has a short travel season, so you can pick up used RVs and new ones that didn’t sell early in the fall.
Florida has a large snowbird population, retirees who flock to the state in the winter. The mild, sub-tropical weather also results in a large permanent population that can live in an RV. This means RV buyers have a much larger selection of potential used vehicles as well as a larger supply of new RVs from dealers.
It also protects the area from the wild seasonal price swings you see in other parts of the country. Note that Florida does charge a modest sales tax and property tax.
Why does Nevada make this list? The modest sales tax on RV purchases and lack of a personal property tax is one. The low registration fees are another.
Arizona is a snowbird mecca, a popular destination for retirees who live in their RVs and stay in the state during the winter months. This means that you can find a ton of RVs on sale in the spring.
This hot desert state is one of the few places in the country where prices actually start to drop in March and April.
We’ve already mentioned Texas having low registration and title fees. Sales tax rates range from 3 to 10 percent, depending on where in the state you buy an RV.
Texas doesn’t have a personal property tax. South Texas is another snowbird refuge, too. And given how far it is from other destinations, you could pick up RVs from people who just don’t want to drive them home.
Washington state has a sales tax and personal property tax. So why do we bring it up? Because it is a bargain compared to surrounding states.
Furthermore, if you spend part of the year in California and part of the year in the Pacific Northwest, consider buying your RV at the start of the season.
Stay in Washington state at least six months, and you won’t have to pay California taxes like registration fees and sales tax on it when you return to California.
How to Calculate the Full Amount of Taxes and Registration Fees?
In every case, the sales taxes are going to be the local sales tax rate multiplied by the cost of the vehicle. If a personal property tax is owed, you’ll have to pay that percentage multiplied by the value of the RV and its contents.
Now that generator and bike rack you added later are factored into the tax bill. Registration fees are based on where you buy the vehicle.
Can You Avoid These Fees And Taxes?
The only way to avoid sales taxes altogether is to buy the RV in a state that doesn’t charge it and hold the vehicle long enough that you won’t have to pay the sales tax your own state would like to collect.
Vehicle registration fees can’t be avoided, but you can buy the RV somewhere with lower registration fees than the alternatives.
What is The Montana LLC Car Registration Loophole?
Montana makes it easy to set up a limited liability corporation or LLC. You can use that company to buy and hold the RV. This can save you quite a bit on sales taxes and property taxes.
Another benefit of the LLC is that it limits your personal liability if the corporation buys the vehicle and maintains the insurance on it. Your personal property is at less risk if you’re sued due to an auto accident with the RV.
A side benefit of the Montana LLC system is that you can get permanent plates for collector cars that sell for thousands of dollars elsewhere.
How the Local Economy Impacts Buying An RV?
The price of RVs can be affected by the local economy. If the economy is in a downturn, the cost of new RVs drops due to low demand.
The cost of RVs is lower around factories that build them, too, and in a slow economy, even new RVs become cheap.
Where you buy an RV can cost or save you thousands of dollars. Understand the rules and restrictions involved, and make these decisions in conjunction with general market trends so that you get the best overall deal on your new RV.