The average monthly payment for a new vehicle in 2015 was $491. Average amount financed: $28,769.
Now, about 10 years later, the average monthly payment in the fourth quarter of 2025 hit an all-time high of $772, and the typical amount financed also hit a record $43,759, according to Edmunds.
Longer loan terms, buyers paying $1,000 or more a month for a vehicle like never before, and higher insurance costs: Buying a new car may be reaching the limits of affordability, in some ways mirroring the other classic American dream: buying a home.
Are you spending too much on a new car? Here’s how to know.
While it’s common to see vehicle budget recommendations that say you should spend 10% to 15% of your take-home pay on car expenses, Chase Auto, the financing arm of Chase Bank, takes a slightly stricter view and advocates for monthly vehicle expenses that don’t exceed 8% of monthly income.
That budget includes the monthly loan or lease payment, fuel, and insurance.
Read more: Buy an electric car? What to know about electric vehicle insurance costs.
Keith Barry, senior auto reporter for Consumer Reports, said the biggest key to a more affordable monthly payment is the down payment.
“We recommend depositing at least 15%,” Barry said. “This saves you money on interest and lowers your monthly payment. You can also get outside financing. Don’t just follow what the dealer tells you; check with a credit union or your own bank. And if you have a high interest rate, you can refinance and save a lot of money.”
Of course, manufacturer incentives, such as low-interest financing or cash-back offers, can play an important role in affordability, Barry noted.
“We’ve found that the most attractive deals tend to be on less popular vehicles, such as sedans and small hatchbacks,” he added. “Keep in mind that automakers are also likely to offer deep discounts on their lower-selling models, which may include those with low resale value and higher repair bills, which could quickly erase any initial savings.”
And when purchasing a vehicle, what should buyers focus on: the monthly payment or the total cost?
Barry explained that the total cost of the car is the main factor to consider. Many car sales representatives will highlight a “low monthly payment,” diverting your attention from the actual cost of the vehicle.
“Because cars depreciate, overpaying will exacerbate long-term losses,” he warned. “You could end up underwater on your loan, which could work against you if you decide to trade it in for your next car.”
Read more: Cheapest car insurance in the US in 2026
Insuring a car or truck is also becoming more expensive. From the first half of 2020 to the same period in 2025, average annual insurance costs increased 60%, according to the Bureau of Labor Statistics.
AAA says the increases aren’t just due to inflation, but also other factors, including technology-packed vehicles that are more expensive to repair. Frequent natural disasters and storms also increase insurance costs.
There are other pressures on prices, such as:
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Lender-required coverage for more expensive vehicles that are financed or leased
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The cost of comprehensive insurance claims, which are for non-accident damages, such as weather-related collisions, theft, or vandalism.
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The volume of claims in your area or state
AAA advises consumers to review their policies to see if there is coverage that is no longer needed or discounts they do not receive, such as those that apply to low-mileage drivers.
Higher deductibles, automatic payment options and bundling auto insurance with home coverage can also lower premiums, AAA reported.
In the Edmunds report on new vehicle financing, chief insights officer Ivan Drury said buyers could see a small improvement in affordability in 2026.
“New vehicle prices remain high but are beginning to stabilize, lower interest rates could offer some relief for both new and used vehicle buyers, and an increase in off-lease returns is expected to provide more affordable alternatives in the used market.”