Average New-Car Price Nears $50K for First Time as Costs Keep Climbing

The cost of buying a new car in the United States has reached its highest point ever, with the average price now approaching $50,000.

New data from Edmunds shows that the average transaction price in October hit $49,105, marking a 3.1% increase from last year. For many shoppers, this is creating a level of sticker shock they have never seen before.

Ivan Drury, director of insights at Edmunds, said the rise wasn’t surprising. “This has been something that we’ve all been waiting for,” he explained, adding that strong sales of electric vehicles played a role because EVs are generally more expensive.

He said that even without EVs included, “there’s virtually no vehicle you can buy today that is cheaper than it was from last year, two years ago, five years ago.”

Many drivers trading in their cars are feeling the jump even more. The average trade-in vehicle is about five and a half to six years old.

Drury noted that people who bought their cars around 2019 or 2020 will be “floored” when they see how much prices have risen.

According to FoxBusiness, he said that buyers returning to dealerships after years away are often shocked to find that the next car they want could cost nearly $10,000 more than what they paid last time.

New-Car Monthly Payments Hit $766 Amid Rising Prices

Along with higher prices, monthly car payments are climbing, too. New-car buyers in October paid an average of $766 per month, which is up 3.2% from a year ago.

Interest rates dipped slightly, from 7% to 6.9%, but that change has not been enough to offset the overall cost.

Drury pointed out that drivers who financed their previous cars at 4% or 5% interest will now face loans that cost much more.

He explained that the average person financing a new car today borrows around $43,000 on a 72-month loan.

“You’re looking at like $9,500 in interest alone,” he said, calling it “a privilege to borrow” because so much of the payment goes toward interest instead of the vehicle itself, Fox5 reported.

Dealerships have tried to soften the blow by boosting discounts. The average discount reached $2,262 in June and came in at $2,240 in October, nearly matching the highest level of the year.

Drury said dealers are offering more incentives because they are receiving extra support from automakers.

Cars are also sitting on lots for about 60 days, which is considered acceptable but longer than many dealers prefer.

Originally published on vcpost.com