New car prices in the United States have skyrocketed past $50,000, pushing monthly payments over $800 and extending loan terms. Discover how this shift affects buyers and explore affordable options—read more now!
After a pandemic‑driven supply crunch, U.S. dealerships are once again stocked with a wide range of models, colors, and options. But the excitement of choice is being dimmed by record‑high price tags and ever‑longer loan terms, making the dream of a new car feel more like a luxury.
Prices Have Shot Up 30% Since 2019
According to Cox Automotive, the average sticker price of a new vehicle now exceeds $50,000—roughly a 30% jump from 2019. Even with incentives, September 2023 saw the first occasion a vehicle broke the $50k barrier, and the price only slipped to $49,191 in January, still a historic high for a typically slow month.
Monthly Payments Reach New Peaks
J.D. Power reports that the average monthly payment on a new car has topped $800, the highest on record. About 20% of borrowers are now paying at least $1,000 per month, and that proportion could double by year‑end, according to S&P Global.
Loan Terms Stretch Beyond Five Years
Loan durations have lengthened dramatically. The average term now sits at 68.8 months—over five and a half years. Loans of 84 months or longer account for 11.7% of the market, nearly twice the share in 2019. Longer terms boost monthly affordability but also raise the risk of delinquency.
Delinquency Rates Echo the 2008‑2009 Crisis
Data from the Federal Reserve Bank of Philadelphia shows that borrowers 90 days past due now represent 8.6% of auto loan holders, a level not seen since the 2008‑09 financial crisis and the early days of COVID‑19.
The Demise of Sub‑$20,000 Cars
Manufacturers are retreating from the low‑price segment. The last model under $20,000, the Nissan Versa ($17,390), was discontinued in December. Other budget‑friendly names—Mitsubishi Mirage, Kia Rio, Hyundai Accent, Chevrolet Spark—have all faded.
Jessica Caldwell of Edmunds notes that American shoppers have largely abandoned compact sedans in favor of SUVs and crossovers. Light‑truck style vehicles now capture about 80% of new‑car sales, with the Honda CR‑V alone accounting for nearly half of those transactions. Prices under $30,000 have become the new benchmark for “affordable.”
Who Is Still Buying?
The buyer landscape is polarising. Households earning over $150,000 represent 29% of new‑car sales, up from 18% in 2020. Meanwhile, the average age of a new‑car buyer has risen to 51, with nearly half of registrations belonging to drivers aged 55 or older.
Manufacturer Strategies Amid the Shift
To stay competitive, some U.S. automakers are re‑introducing lower‑priced models. Chevrolet’s new Trax crossover starts at $21,700, Ford’s Maverick is priced from $28,145, and Ford plans to add several sub‑$40,000 vehicles by 2030. Honda is also reviewing its lineup to preserve value for cost‑conscious shoppers.
What This Means for Prospective Buyers
Industry experts, including NADA’s chief economist Patrick Manzi, warn that many consumers are approaching a “pay‑off point” where traditional financing no longer feels sustainable. The combination of soaring vehicle prices, higher monthly payments, and lengthening loan terms is reshaping the market into one where a new car increasingly resembles a luxury purchase.
For those still on the hunt, the advice is clear: explore certified‑pre‑owned options, consider financing a modest SUV rather than a compact sedan, and keep a close eye on loan terms to avoid becoming part of the growing delinquency pool.
As the automotive landscape continues to evolve, staying informed is the best way to navigate the high‑cost road ahead.