SouthernWorldwide.com – The cost of owning a vehicle is on the rise, with consumers facing both high gas prices and increasing prices for new and used cars.
The price of fuel has become more expensive, contributing to the overall cost of driving. Simultaneously, both new and used vehicle prices are causing concern for American consumers.
In March, the average price for a new car approached $50,000. This represents a 3.5% increase compared to March of the previous year. Furthermore, the average new car price is a substantial 30% higher than it was in 2019.
The situation for used cars offers little relief. In March, the average cost of a used car was $25,390, according to Kelly Blue Book.
Several factors are contributing to these escalating car prices. Persistent high inflation, which reached 3.8% in April – its highest point in nearly three years – is driving up the costs of numerous goods and services. Additionally, a trend of Americans purchasing larger, more expensive vehicles is also playing a role.
For many individuals, the prospect of spending $50,000 on a new vehicle is financially unfeasible.
It is crucial to carefully consider your monthly expenses when evaluating financing options for a new vehicle. The average interest rate for auto loans currently stands at 7%. To make monthly payments more manageable, some consumers are opting for longer loan terms.
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Data from Edmunds indicates that one in four Americans are extending their loan terms to 84 months, which is equivalent to seven years. This strategy allows them to afford the monthly payments for their desired vehicles.
“People are saying, ‘I want a car, it’s expensive, if I stretch out the payments, then I can afford it monthly,'” stated CBS News business analyst Jill Schlesinger.
During the first quarter of 2026, the average monthly payment for a new vehicle surged to $773, excluding the cost of auto insurance, according to Edmunds.
“We have plenty of people who are paying $1,000 a month for their car payment,” Schlesinger added.
Do the Math
From Schlesinger’s perspective, individuals who cannot afford a five-year loan may be considering purchasing a vehicle that is too expensive for their budget.
Given the high cost of cars, some Americans are contemplating repairing their older vehicles. While this can be a sensible option in certain situations, auto experts advise against investing excessively in aging cars.
A general guideline is to avoid spending more than half of a car’s current value on repairs or upgrades. This ensures that the investment remains proportionate to the vehicle’s worth.
“Let’s say your car is worth $8,000. You’re at the end of the life of the car. Don’t be paying $5,000 to fix the car,” Schlesinger explained. “At some point in the life cycle of the car, it’s better to actually go into a brand new car, with a new warranty and then you’ll have some safeguards.”
The decision between leasing and buying is another important consideration for consumers aiming to save money at the dealership. Shoppers who prioritize having the latest features and models might lean towards leasing a new car. However, it is essential to remember that at the end of the lease term, ownership of the vehicle is not transferred.
In contrast, “at the end of a car loan, you own the car,” Schlesinger pointed out.
Negotiating Tactics
Schlesinger highlighted a primary method for consumers to gain leverage when negotiating with sellers. Being flexible and considering various car brands and dealerships is crucial. Thorough online research before visiting a dealership can also be highly beneficial.
However, the most effective bargaining tool available to consumers is the willingness to walk away from a deal. This demonstrates that you are not overly committed and are prepared to seek alternatives.
“That is your gift. If you can walk away, you will be able to negotiate a better deal. Try not to get married to any one dealership and shop around,” Schlesinger advised. “The more info you have, the better.”
