The price of a new car in the United States has climbed so high that even households earning six figures can struggle to afford one without stretching their budget. With the average new vehicle sticker price hovering around the $50,000 mark, and many popular SUVs, electrified models, and luxury-trim variants pushing past $55,000 or more, what used to feel like a comfortable middle-class purchase now often feels out of reach for many buyers.
This surge in pricing reflects broader trends in the automotive market: higher material and manufacturing costs, greater technology and safety feature content, and consumers increasingly opting for larger vehicles with more equipment. But the net result is the same; newer cars offer more value and capability than ever, yet the cost has exploded faster than wages for most Americans.
For many households, that means considering used vehicles, extended financing terms, or settling for base trims rather than the equipped, comfortable cars they truly want. In a market where the starting price of a new car now rivals, or exceeds, what were once considered premium-brand vehicles, affording reliable transportation has become a more complex financial decision than it used to be.
In order to give you the most up-to-date and accurate information possible, the data used to compile this article was sourced from various manufacturer websites and other authoritative sources, including Kelley Blue Book and Forbes.
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The average new car buyer in America is paying around $50,000
The average is unaffordable to most Americans
Credit: Ford
For some time now, the price of the average new car in America has hovered around the $50,000, with new car prices back in December hitting an all time high. The rising prices of new cars is a massive issue, with the affordability crisis getting worse and worse by the day. If you take into account what the average American earns, the ‘average’ price is well beyond what most people can actually afford.
People are spending far too much on new cars
According to Kelley Blue Book, new car buyers spent around $49,191 in January 2026, which is pretty absurd. This is actually down 2.2 percent from December, where buyers were spending $50,326. A price drop in January is usually expected, with Americans generally buying more luxury cars in the last month of year, which brings the average up.
How much do you need to earn to afford ‘average’?
The general rule of thumb is that you should only spend around 10 to 15 percent of your take-home income on transportation. On average, people are opting for longer car loan terms when it comes to financing, with most people going with the 72-month plan. It is recommended that you opt for a shorter loan term if you can afford the higher monthly payments, though.
If you do the math, you’d have to take home just over $80,000 to be able to afford the monthly payments on a $49,000 car, assuming that the loan period you opt for is 72 months. As mentioned above, it is recommended to take a lower loan term. With shorter loan terms, though, you’d have to earn a six-figure salary to be able to comfortably afford a car at this price point.
According to Forbes, the average annual salary in the United States currently sits at $64,505, which is much lower than the salary you’d need to earn to afford the “average” new car.
You choose what you buy
Credit: Toyota
Obviously, you don’t have to shop at the price point of the average new car. Compact SUV buyers tend to spend less money on a new car, with the average purchase price of a compact SUV sitting at around $36,414 in January 2026. This is probably one of the most sensible segments to shop in, with tons of comfort and practicality on offer at a reasonable price.
Meanwhile, full-size pickup truck buyers tend to drastically overspend on their vehicles. The average full-size truck buyer spent around $70,000 on their vehicle last month. Considering how popular this segment is, this obviously brings the average up
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The sub-$20,000 car is gone, and it isn’t likely to ever come back
Cheap cars are becoming increasingly rare
Credit: Nissan
Something that has played a part in bringing the average price of new cars up is the disappearance of the $20,000 new car. There used to be a good couple of options out there that you could get for under $20K, but in 2026 every one of these options has been pulled from the market. Given the state of the industry, it isn’t likely that we’ll see a new car come in to fill this gap any time soon.
Every automaker has ended production of their sub-$20K cars
It wasn’t all that long ago that you actually had a few choices when it came to buying a car under $20,000. In 2023, there was the Kia Rio, the Mitsubishi Mirage, and the Nissan Versa. Kia was the first of these three automakers to discontinue their car, with the 2023 model being the last. The Mirage was the next to go, with Mitsubishi ending production in 2024. The Nissan Versa was the last to be pulled, with the cheap Japanese compact car being discontinued at the end of 2025.
While you might still be able to find some Versa models on dealer lots that still feature a sticker price of less than $20,000, these will be the last of their kind. Given how rare the base S trim, there may not even be any left. What is for certain is that in a short couple of months, there will be no new cars on any lot at this price point.
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There are still some pretty great affordable options out there that won’t break the bank
You can still get a nice car under $25,000
Credit: Kia
While the list of affordable cars feels like it is rapidly shrinking, there are still a number of really good options out there if you’re willing to bump your budget up to $25,000. While the average price of a new car is phenomenally high, you don’t have to shop at that price point to get something nice.
Cheapest new cars in 2026
Model
Starting MSRP
2026 Kia K4
$22,290
2026 Nissan Sentra
$22,600
2026 Hyundai Elantra
$22,625
2026 Toyota Corolla
$22,925
2026 Volkswagen Jetta
$23,995
While it is sad that the $20,000 car is gone for good, there are still a ton of really affordable cars on the market. There are some great options that start under the $25,000 mark, with the most affordable of those listed above. Given how affordable they are, most of them will exceed your expectations when it comes to comfort and practicality.
