The price of goods and commodities has been on a roller coaster ride ever since the Covid-19 pandemic, and as all of us know by now, the automotive industry has been far from immune to such fluctuations. Consumers are, of course, particularly feeling the effects of rising material costs and tariff-related complications in the MSRP of new vehicles, which have yet again hit an all-time high.
Data from Kelley Blue Book shows that the average price of a new vehicle reached a record high of $50,326 in December 2025. That average price figure has climbed steadily over the past two years, but the tail end of 2025 marked the first time it crested $50K.
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Now, these alarming average new car prices aren’t indicative of pricing across body styles and brands; KBB data shows consumer choice was in no small part behind the increase, as the number of full-size trucks hit a five-year high through the end of 2025. U.S. buyers purchased over 233,000 full-size trucks in the fourth quarter of 2025, at an average price of $66,386. Similarly, the average EV sat around $58,034 through the end of 2025, further driving up the average new-vehicle transaction price.
But it isn’t simply rising prices that are a cause for concern. As per usual, the majority of folks purchasing new cars these days are financing them, but the length and rate of these loans has skyrocketed. The average payment for new-vehicle buyers through December 2025 was set at $722, a 2.4 percent increase from 2024— and 20.8 percent of new vehicles financed had a loan term of 84 months or more. That’s seven-plus years of payments.
Down payments are also taking a hit in the current environment, as consumers aren’t able to scrape as much cash together. The average new-vehicle buyer brought in a down payment of around $6228 in 2025, a decline of 9.2 percent year-over-year. Money is often required elsewhere; as data from Cox Automotive shows, the total cost of vehicle ownership—monthly payments as well as gasoline, insurance, and repairs—rose 48 percent since 2019.
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Of course, there is a nasty side effect to such long loan terms. Consumers who opt for 84-month loans may be victimized by negative equity down the line, if they owe more than the financed car is worth. Negative equity isn’t a problem that requires immediate attention, but it can quickly become a sticky situation if consumers sell their car before the loan is paid off. Even so, dealerships are typically thinking in the short-term and attempting to hit their sales goals instead of pondering the implications of such long loans, Joseph Yoon, a consumer insights analyst at Edmunds, told Automotive News.
“I don’t assume cars will be any cheaper five or six years from now,” Yoon told AN.
However, there is a sliver of hope. Average new-vehicle transaction prices fell slightly to $49,191 in January, down 2.2 percent from December 2025. This decline shouldn’t be taken as a trend indicator, however, as KBB data often shows a seasonal decline in the months of January and February. Either way, buying a new vehicle is a particularly expensive endeavor these days.
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A New York transplant hailing from the Pacific Northwest, Emmet White has a passion for anything that goes: cars, bicycles, planes, and motorcycles. After learning to ride at 17, Emmet worked in the motorcycle industry before joining Autoweek in 2022 and Road & Track in 2024. The woes of alternate side parking have kept his fleet moderate, with a 2014 Volkswagen Jetta GLI and a BMW 318i E30 street parked in his Queens community.
