In 2015, the average monthly payment for a new vehicle was $491, with an average amount financed of $28,769. Fast forward to the fourth quarter of 2025, and the average monthly payment hit an all-time high of $772, with an average amount financed reaching $43,759.

Longer loan terms, rising costs, and higher insurance expenses are pushing the limits of car affordability, mirroring the challenges of buying a house. Overspending on a new car is a growing concern.

Chase Auto recommends monthly vehicle expenses not exceeding 8% of monthly income, including loan or lease payments, fuel, and insurance costs. A down payment of at least 15% is recommended to save on interest and lower monthly payments.

Manufacturer incentives, especially on less popular models, can help make vehicles more affordable. Focus on the total cost of the car rather than just the monthly payment to avoid long-term financial losses.

Average annual car insurance costs have risen by 60% from the first half of 2020 to 2025 due to inflation, technology in vehicles, and natural disasters. Factors like lender-required coverage, comprehensive insurance claims, and claim volume affect pricing.

Consumers can lower insurance premiums by reviewing policies, raising deductibles, opting for auto-pay, and bundling coverage. Edmunds predicts some relief in vehicle affordability in 2026, with stabilizing prices, lower interest rates, and more affordable options in the used market.

Read more at Yahoo Finance: New car payments just hit a record high. Here’s what you should be spending.