Average Car Price in 2025: What Buyers Really Pay

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.^{[1] [2]}

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.^[3] 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.

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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.^[4]

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.^[5]

• Rebates and incentives: Discounts vary by manufacturer and season. But some manufacturers offer special rebates or incentives to attract new customers.^[6]

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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.^[7] 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:

• 

  Buy used

  New cars rapidly depreciate in value, so buying a car that’s just 2 or 3 years old can help you get a reliable car at a much lower cost than a new model.

• 

  Time your purchase

  If you can, wait to buy a car until October, November, or December. During these months, car dealerships are looking to clear out space to make room for next year’s models, so you may be able to secure a better-than-usual price.

• 

  Focus on the out-the-door price

  Instead of focusing on your car payment amount, ask the dealership for its best out-the-door price — this total reflects the cost of the vehicle with tax, title, and fees. This will help you compare your options (and find any unexpected add-ons) and reduce confusion or pressure when you’re at the dealership.

• 

  Secure financing on your own

  It can be cheaper to secure financing on your own than to apply for financing through a dealership.

• 

  Think about maintenance and insurance

  Some cars are more expensive to insure and repair than others. A car with extra safety features and reliability ratings can be cheaper to own over time. Kelley Blue Book has a tool you can use to compare the costs of ownership for different makes and models.

• 

  Shop around

  Before heading to the dealership in person, email several dealers with the makes and models you’re interested in. You can negotiate pricing via email, so you can get the best deal before setting foot on a dealership lot.

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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.

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