The Price of a New Car Has Stopped Rising. The Cost of Owning One Hasn't.

For most of the last 5 years, the story of buying a new car in America was the sticker. Prices jumped during the chip shortage, dealers charged over list, and the average new vehicle passed $50,000. That part of the story has stopped.

J.D. Power and GlobalData expect the average new vehicle sold at retail in October to cost $46,329, down 0.1% from a year ago, with incentives up 13.1% to $3,304 a vehicle. Kelley Blue Book's measure, which is calculated differently, was $50,562 in September, up just 0.7% in a year. And yet the same October forecast put the average monthly payment at $823, up 2.6% and the highest ever for an October. "Affordability remains a headwind," said Thomas King of J.D. Power. The price stopped rising. The bill didn't.

A payment has 3 parts

A car payment is set by 3 things: how much you borrow, the interest rate, and how many months you take to pay it back. The price of the car is only the starting point for the first. Edmunds, which tracks financing on new-car sales every quarter, found that buyers financed a record $44,664 on average in the third quarter, up from $42,744 a year earlier, even though prices barely moved. The rate held at 7.0%. The average loan ran 70.5 months, and the average payment reached a record $787 a month. More than 1 in 5 new-car buyers, 21.2%, now pays $1,000 a month or more, also a record.

Measured in today's dollars, the jump is smaller than it looks. Edmunds' average payment of $556 in the third quarter of 2019 is about $730 in today's money, so the real increase over 7 years is about 8%. What changed more is the way buyers are getting to that number.

Longer loans lower the payment and raise the cost

When the price is high and the rate won't come down, there's only one dial left: time. Edmunds counted 25.5% of new-car loans in the third quarter at 84 months or longer, a record, up from 21.8% a year earlier. J.D. Power, which measures differently, expects 13.3% in October; by its count, the share was 12.8% in March 2026, up from 7.3% in March 2019. Either way, 7-year car loans have gone from unusual to ordinary.

The trade-off is simple arithmetic. Take the average amount financed in the third quarter, $44,664, at the average 7.0% rate. Stretching the loan from 5 years to 7 cuts the payment by $210 a month and adds more than $3,500 in interest.

Carveyance calculation: $44,664 financed at 7.0% a year, the Edmunds averages for the third quarter of 2026, before taxes and fees.

A 7-year loan on a car that loses value faster than it's paid off sets up the next one.

Underwater, and rolling it over

The longer the loan, the longer the owner owes more than the car is worth. J.D. Power expects 29.6% of the trade-ins in October to carry negative equity. Edmunds put it at 29.1% in the third quarter, with underwater trade-ins carrying an average of $7,107, up from the $5,000 to $5,500 that was typical from 2016 to 2019. Underwater trade-ins briefly became far less common in early 2022, when used-car prices spiked and only 14.7% were underwater, but they're back to about where they were before the pandemic.

That debt doesn't disappear when the car is traded. Often it's added to the next loan. Edmunds found that buyers who rolled negative equity into a new car financed an average of $57,235 at 8.1%, with a payment of $952 a month, and 91.2% of them took a loan of 72 months or longer. Over the life of the loan, they're on track to pay $16,610 in interest. It's how a long loan on one car becomes a bigger loan on the next.

The rest of the bill

The payment isn't the only part of owning a car that has climbed. The government's consumer price index shows where the costs moved. Insurance has finally started to fall, down 5.0% in the past year, but it's still 14.0% higher than 3 years ago and nearly half again what it was in 2019. Repairs and maintenance are up 5.8% in a year. Gasoline is up 34.2%, and AAA's national average for regular was $4.29 a gallon on October 26, against $3.05 a year earlier. The only line that has stood still is the one most people watch: new-vehicle prices, up 0.1% in 3 years.

Consumer price index, September of each year, not seasonally adjusted; changes calculated from the index levels. Source: Bureau of Labor Statistics, October 14, 2026.

A tax break, with conditions

There is one new offset. For 2025 through 2028, buyers can deduct up to $10,000 a year of interest on a loan for a new vehicle whose final assembly took place in the US, whether or not they itemize. It covers cars, SUVs, vans, pickups and motorcycles under 6,350 kg (14,000 lb) gross vehicle weight, bought for personal use with a loan secured by the vehicle. Leases and used cars don't qualify, and the deduction phases out above $100,000 of modified adjusted gross income for single filers and $200,000 for joint filers. Lenders will report the interest on a new form, 1098-VLI, starting with the 2026 tax year. It lowers the cost of the interest for buyers who qualify. It doesn't lower the payment.

Where the strain shows

Americans owed $1.71 trillion on auto loans in the second quarter, according to the New York Fed, and auto balances were moving into serious delinquency at an annualized rate of 3.00% in the second quarter, up from 2.93% a year earlier. The strain is sharpest among borrowers with weaker credit: KBRA, a credit-rating firm, put 60-day delinquencies on non-prime auto loans in bonds it tracks at 6.64% in September. And more of those borrowers are buying new: J.D. Power expects subprime buyers to make up 11.0% of new-vehicle financing in October, up 1.5 points.

None of this means the market is breaking. Sales are forecast at a steady annual pace of 15.6 million, and incentives are rising. But the shape of a typical deal has changed. The car didn't get more expensive this year. The loan did, because it costs more, lasts longer and often carries the last car with it. For a lot of households, the price of a new car is no longer the number that decides whether they can afford one. The payment is, and the length of time they'll be making it.