)
Why you can trust Insurify: Comparing accurate insurance quotes should never put you at risk of spam. We earn an agent commission only if you buy a policy based on our quotes. Our editorial team follows a rigorous set of editorial standards and operates independently from our insurance partners. Learn more.
Vehicle prices have jumped significantly in the last few years. In 2025, the average cost of a new car was $49,077 — a 27% increase from 2020. Used cars are less expensive, but still a significant investment, costing around $25,393 on average.[?] [?]
Relatively high interest rates and higher vehicle prices have pushed new car loan payments up to $749 per month and used-car financing to $529 per month.[?] With these high costs, before financing a vehicle, it’s important to carefully think about the type of car you need and your budget and to compare car insurance quotes.
Find Cheap Car Insurance
Liability rates start as low as $40 per month
Secure. Free. Easy-to-use.
Based on 7,669+ reviews
4.8/5
Average price of new and used vehicles
The average price of a new vehicle is nearly $50,000, while the average cost for a used car is slightly more than $25,000, according to Kelley Blue Book’s August 2025 data. But if you’re financing your next vehicle, the purchase price is just one part of the expense. You’ll also need to consider factors like dealer incentives and insurance costs.
Plus, new-car loans tend to have higher interest rates than financing for used vehicles.
The table below highlights the differences between new and used vehicles:
Data Point  | New Vehicles | Used Vehicles |
|---|---|---|
| Average price | $49,077 | $25,393 |
| Year-over-year price change | 2.5% | 0.88% |
| Average dealer incentive | $3,553 | N/A |
| Average loan APR | 6.8% | 11.54% |
| Average monthly cost of insurance | $254 | $198 |
Trends in average car prices since 2019
In 2019, prices for new and used cars were relatively affordable. The average cost of a new car was $37,401, while a used car averaged $20,600. Since then, prices have increased significantly.
During the pandemic, workplace restrictions caused vehicle output to drop; supply declined as a result. Microchip shortages also contributed to supply chain issues for newer models that use advanced technology that relies on this critical part.
Additionally, economic stimulus packages passed during the pandemic significantly increased demand, leaving many manufacturers unable to keep pace. With fewer new cars available, the used-car market became red-hot, with the average used-car price surpassing $28,000 in 2022.[?]
As the economy has adapted and pandemic-related restrictions have ended, used cars have become cheaper. But new-car prices have increased, in part due to the new tariffs, import costs, and inflation.
The table below shows the average new and used car prices from 2019 through 2025.
Year | New | Used |
|---|---|---|
| 2019 | $37,401 | $20,600 |
| 2020 | $38,635 | $21,558 |
| 2021 | $43,355 | $25,829 |
| 2022 | $48,301 | $28,061 |
| 2023 | $48,451 | $26,651 |
| 2024 | $47,870 | $25,172 |
| 2025 | $49,077 | $25,393 |
Average car price by vehicle type
Prices vary significantly by vehicle type. In general, hatchbacks and sedans are the least expensive, while minivans, coupes, and pickup trucks have higher manufacturer’s suggested retail prices (MSRPs).
Since the pandemic, minivan supply has declined while prices have gone up significantly. The Chrysler Pacifica is one of the most popular models, and its price has increased by 27% over five years.
Pickups continue increasing in popularity, and the market is competitive. As a result, prices have seen smaller increases. The Ford F-150 is the top-selling pickup truck in the U.S., and its starting MSRP has increased by 9.5% over the past five years.
The chart below highlights the MSRP pricing changes for top-selling vehicles in each category over five years, according to Experian and Kelley Blue Book data:
Category | Example Model | 2020 Starting MSRP | 2025 Starting MSRP | 5-Year Price Change |
|---|---|---|---|---|
| Pickup | Ford F-150 | $36,196 | $39,645 | 9.5% |
| Sedan | Toyota Camry | $25,420 | $29,795 | 17.2% |
| Hatchback | Honda Civic | $21,755 | $25,400 | 16.8% |
| Coupe | Mercedes-Benz CLA | $37,645 | $45,500 | 20.9% |
| SUV | Toyota RAV4 | $28,525 | $30,645 | 7.4% |
| Minivan | Chrysler Pacifica | $34,990 | $44,445 | 27% |
Factors that affect vehicle prices
Several factors affect what consumers pay for new and used cars, including:
Demand and inventory: When dealerships have more vehicles on the lot, there’s more competition, so dealerships will offer lower prices or special deals to boost sales. And if inventories are limited — like they were during the pandemic — dealers don’t have enough vehicles to meet demand, and prices go up.
Interest rates: Higher borrowing costs make it more expensive to finance a car, so dealerships may lower car prices to make the loan terms more appealing to car buyers.
Inflation and materials: When inflation is high, everything is more expensive, including the cost of parts, electronics, and EV batteries. Consequently, car prices often increase to offset those added costs.
Season: When dealerships are clearing out stock to make room for next year’s models, you may be able to secure a better deal.[?]
Rebates and incentives: Discounts vary by manufacturer and season. But some manufacturers offer special rebates or incentives to attract new customers.[?]
Find Car Insurance for Your New or Used Vehicle
See quotes from top insurers in minutes
Secure. Free. Easy-to-use.
Based on 7,669+ reviews
4.8/5
How price adds up to your monthly payment
With the sky-high prices of new and used vehicles, many people turn to financing to help cover the cost. In fact, 80% of people financed new cars with auto loans, according to Experian’s State of the Automotive Finance Market Q2 report.
With car loans, you could face steep monthly payments. Based on the average transaction price, the average new-car payment was $749 per month, while the average used-car payment was $529. Your payment depends on the value of the car, your down payment amount, your credit, and the length of the loan term.
How interest rates affect your payments
To qualify for the best rates and loan terms, you generally need very good to excellent credit. You’ll pay interest on the car loan — the average annual percentage rate (APR) for new cars was 6.8% as of 2025. And loan terms are longer, averaging 69 months for new vehicles.
Consider this example: You purchase a $50,000 car and make a down payment of $5,000, so you finance $45,000. You qualify for a 60-month loan at 6.8% APR. With those terms, you’d have a monthly payment of $887. If you paid only the minimum each month, you’d pay a total of $53,209 over the life of the loan — interest would add more than $8,000 to your total cost.
How loan terms affect your repayment
Car loans can have terms between two and nine years. While a longer term could give you a more affordable monthly payment, you’ll typically have a higher interest rate and pay more interest over the life of the loan.
Consider this example: As in the scenario above, you purchase a $50,000 car with a down payment of $5,000, so you finance $45,000. You opt for an 84-month loan and qualify for a rate of 8%. You’d have a smaller monthly payment — $701 per month rather than $887 — but you’d pay a total of $63,916 by the end of your loan term. The longer term would cause you to pay $10,000 more in interest.
In general, it’s best to choose the shortest loan term you can afford to secure the lowest rates.
Car ownership expenses beyond purchase price
The average total cost of owning a new vehicle is $11,577 per year, according to data from AAA.[?] Besides the purchase price and loan payments, it’s important to factor in other expenses that add to the total cost of vehicle ownership.
Expenses to consider when budgeting for a new or used car include:
Registration fees and taxes: Drivers pay about $813 per year in registration fees and taxes.
Depreciation: Your car begins to lose value as soon as you leave the dealership. With a new car, you’ll lose an average of $4,334 per year in value.
Fuel or EV charging: Drivers pay about 13 cents per mile. Assuming you cover 12,000 miles per year, fuel will cost around $1,560 annually. With electric vehicles (EVs), charging costs depend on what kind of power connection you have. On average, drivers pay $709 per year.
Insurance: Full-coverage car insurance averages $177 per month, and liability-only insurance averages $100, according to Insurify data.
Maintenance: Maintenance and repairs typically average 11 cents per mile. If you drive 12,000 miles per year, plan to allocate $1,320 annually to cover maintenance.
Extended warranty: An extended warranty can help you cover vehicle repair and replacement costs after the manufacturer’s warranty expires. They typically last between 30 and 36 months, and costs range from $70 to $100 per month. But the extra cost might not be worth it for everyone.
As you prepare a budget to purchase a new car, planning to set aside 15% above your monthly car payment each month can help you account for extra costs — like insurance, fuel, and maintenance — and avoid overstraining your budget.
How to save on your next car purchase
To save money on your next car, follow these tips:
Compare Car Insurance Quotes
Find the best policy for your new or used vehicle
Secure. Free. Easy-to-use.
Based on 7,669+ reviews
4.8/5
Comparing financing options
Since buying a car with cash can be challenging, especially a new car, it can be a good idea to get pre-qualified for a car loan and secure financing on your own. You can often find cheaper rates from banks, credit unions, or online lenders than you’d get through a dealership.
If you’re a member of a local credit union, you could save money. Credit unions generally offer lower rates than banks or dealership financing. But dealership financing can make sense if you have excellent credit and want a car that matches the terms of special promotional offers.
The table below highlights some key factors of different financing options:
Financing Option | Typical APR Range | Pros | Cons | Best For |
|---|---|---|---|---|
| Dealership financing | Varies by lender and credit profile | May be eligible for dealer incentives; one-stop shopping; bundled incentives | Higher rates; part of pressure sales tactics; added fees or add-ons | Buyers who qualify for special promotional offers |
| Credit union loan | 60-month loan, new, 5.75%; 48-month loan, used, 5.82% | Lower rates; lower fees; flexible term options | Membership required; limited availability; slower approval process | Members of a reputable credit union |
| Bank loan | 60-month loan, new, 7.49%; 48-month loan, used, 7.40% | Lower rates than dealerships; predictable terms; sometimes added benefits for existing customers | Higher rates than credit unions; strict eligibility requirements; vehicle restrictions | Existing bank customers |
| Leasing | Equivalent of 3%–8% | Lower payments for new cars; no commitment; may be able to drive a better-quality car | Restrictive terms on mileage; no gained equity; you may need to pay added costs for wear and tear | People who drive fewer-than-average miles and want the latest technology and models |
When you’re shopping for a new car, you may hear advertisements boasting 0% APR on car loans. While 0% APR offers do exist, they tend to be limited. In general, you’ll need excellent credit to qualify, and the 0% APR offer usually applies only to specific models and certain loan term lengths.
Average car price FAQs
If you’re in the market for a new or used car, the following information can help you plan and budget for your purchase.
What’s the average price range for new cars?
While some models were in the $20,000 to $30,000 range, the average price for a new car was $49,077 in 2025.
Is $5,000 a good price for a car?
Finding a reliable car for $5,000 in today’s market can be challenging. Cars in that range will be 15 years or older and have more than 100,000 miles.
Is $10,000 a good budget for a car?
A $10,000 budget can be sufficient for a used car. Most vehicles in this price range will be about 10 years old and have more than 75,000 miles.
What’s the cheapest new car?
Now that the Mitsubishi Mirage and the Kia Rio have been discontinued, the cheapest new car in 2025 is the Nissan Versa. Its base model includes an automatic transmission and starts at $20,490.
What’s the cheapest car to insure?
The cheapest car to insure is the Subaru Forester, based on Insurify data. On average, Forester drivers pay $147 per month for full-coverage insurance.
)
)
)
)
)
){kind=small}
){kind=small}