The average new car transaction price has climbed past $49,000, up from roughly $35,000 to $37,000 a decade ago. This represents a $12,000 to $14,000 increase in under a decade, and average incomes haven't kept up at the same rate.
Ivan Drury, Director of Insights at Edmunds, notes that this is due to automakers targeting higher-income buyers who are comparatively less affected by external factors such as pandemics and wars. The other half of the squeeze is the disappearance of cheap cars.
There are virtually no new vehicles for sale under $20,000, which means buyers who used to have options at the bottom of the market no longer do.
This problem is compounded by automakers' focus on higher-income buyers, with over 43% of new vehicles now purchased by households earning $150,000 or more.
Low-income borrowers are facing significant challenges, including higher interest rates and debt. The average monthly auto loan payment was $680 in 2025, up from $506 in 2018.
However, low-income borrowers paid more than this, $738 per month on average, due to their higher credit scores.
The disappearance of affordable cars has created a perfect storm for families to struggle with debt. With interest rates rising and longer repayment periods becoming more common, it's clear that something needs to be done to address this issue.
In the first quarter of 2026, Edmunds revealed that around 20% of all auto loan monthly payments were at or above the $1,000 mark.
This trend is likely to continue as long as automakers prioritize higher-income buyers and interest rates remain high.
The disappearance of affordable cars has created a perfect storm for families to struggle with debt.
