In 2025, the “average” new car is no longer average. With the average transaction price of a new vehicle in the U.S. hitting $48,699 [Source], car ownership has become increasingly out of reach for many Americans. Once a symbol of freedom and middle-class stability, the new car now represents something else entirely: a luxury item.

As wages stagnate and financing costs rise, a car that fits your needs, budget, and lifestyle feels less like a given—and more like a stretch. Here’s why we’re in a full-blown car affordability crisis, and what consumers need to understand about the hidden costs (and potential offsets) of driving in 2025.

🚗 The Average New Car Now Costs $48,699

According to CarEdge, the average transaction price of a new car in early 2025 reached $48,699. To put that into perspective:

• In October 2019, the average was $38,259 [Source]

• In December 2015, it was $34,428 [Source]

• That’s an 11% increase between 2015 to 2019. A 27% increase from 2019 to 2025, and a whopping 41% increase between 2015 to 2025.

Yet the U.S. median household income as of May 2025 was around $75,580 [Source], meaning that:

The average new car costs about 65% of the average household’s annual income.

Financial experts typically recommend spending no more than 15% of your annual income on a car. At nearly $50K, even a modestly priced sedan now blows past that threshold for the average American.

💰 What’s Driving the Car Affordability Crisis?

Several forces are converging:

1. Skyrocketing Interest Rates

• Average new car loan as of July 2025 was anywhere from 10.86% to 19.79% [Source]

• In July 2019, the average new car loan rate was just 5.8% [Source]

• Higher interest = hundreds or thousands more in total payments over the life of a loan

2. Longer Loan Terms

• 72- and even 84-month loans are now common

• These stretch payments lower monthly cost—but keep buyers underwater on their loans longer

• Higher total interest paid over time

3. More Expensive Vehicle Features

• Automakers prioritize SUVs and trucks with high-tech features and premium trims

• Fewer budget options: entry-level models are vanishing from showroom floors

• Consumers have fewer “cheap” new car options to choose from

4. Stagnant Wages

• Median weekly earnings have remained relatively flat

• Inflation-adjusted incomes have not kept pace with vehicle prices

• Real purchasing power has declined

Monthly Car Payments are Squeezing Household Budgets

You can see in the above comparison that monthly car payments are about $343 higher per month in 2025 vs. 2019.

While rising vehicle prices hurt, there are a few ways savvy drivers can offset some of the costs:

• Fuel efficiency rebates for EVs and hybrids

• Dealer incentives on year-end models or discontinued trims

• Loyalty or cash-back rewards from certain financial products like Fasten, or employer programs

• Lower insurance rates offered to those with demonstrable safe driving records

Still, these offsets might save a few hundred to a couple thousand dollars, not the tens of thousands needed to restore car affordability to previous norms.

In 2025, owning a new car isn’t just about transportation—it’s a financial decision with long-term consequences. When the “average” car costs nearly $50,000, it’s no longer just a middle-class staple. It’s a luxury. And until systemic changes happen, many Americans may be forced to settle for less mobility—or take on more debt to get behind the wheel.