Everyone who has owned a car knows how quickly it depreciates in value. But sometimes, when you know your current motor is on its last legs, purchasing a brand-new car instead of another second-hand one can be a better long-term investment.
But it is a tough price to pay when new cars are reaching a threshold that makes them even more unaffordable for consumers. A Cox Automotive study showed that half of new vehicle buyers in 2020 earned less than $100,000 a year.
By 2025, this percentage had decreased to 37%, while the share of buyers earning more than $250,000 nearly doubled to 21%. The verdict is clear: the middle class are being priced out of buying a brand-new car.
Increases in Car Price
For the first time, average new car prices surpassed $50,000 in September 2025.
According to Kelley Blue Book, the new average comes despite discounts offered by automakers and dealers. The report states that the end of the EV tax credit, consumers opting for luxury vehicles and Donald Trump imposing tariffs on foreign exports have all contributed to the rise in costs.
“Today’s auto market is being driven by wealthier households who have access to capital, good loan rates, and are propping up the higher end of the market,” states Erin Keating, an executive analyst at Cox Automotive.
“While there are many affordable options out there, many price-conscious buyers are choosing to stay on the sidelines or cruising in the used-vehicle market.”
EVs have also increased in cost, with the average EV selling for $58,124 in September 2025.
The Introduction of Longer Car Loans
As a result of a lack of cash flow to pay for a car upfront, many buyers are resorting to car loans lasting as long as seven years. According to the same report, 20.8% of new vehicles financed in the U.S. had loan terms of 84 months or more.
The average down payment also declined 9.2% year over year to around $6,228, as consumers had less cash available. Experts warn that long loan terms can lead to negative equity, where the car is worth less than what is owed on the loan, creating difficulties if the owner needs or wants to sell or trade in the vehicle.
A seven-year loan for a car can also be argued to resemble a second mortgage, tying yourself into years of payments just to purchase a vehicle. For many buyers, this long financial commitment adds pressure to household budgets and increases the risk of owing more on the car than it is worth.
Car Maintenance and Ownership Price Increases
When considering the increase in prices and longer car loan durations, the cost of simply owning and maintaining a car has also increased.
CarScoops says insurance prices have skyrocketed by more than 50% since 2019, while repair costs are up roughly 46%. And to add insult to injury, following the U.S.’s involvement in its war with Iran, gas prices have also risen, making consumers feel the financial strain even more.
It explains why the middle class of Americans are finding it difficult to explore the possibility of prospective long-term longevity with new cars due to the rise in costs across the board.
Consumers are forced to invest in older or used cars, often settling for higher mileage vehicles and fewer features as affordability continues to become a major concern for households.