Sticker shock has kept millions of Americans out of the showroom — and the Trump administration says help is coming.
The White House has announced it’s rolling back Biden-era environmental standards for vehicles, a move officials say will cut the average cost of a new car by $1,000 (1). But analysts warn the savings may be more about math than actual relief for shoppers.
The typical new vehicle in the U.S. now costs more than $50,000 for the first time ever, according to Kelley Blue Book (2). That’s up from under $40,000 just five years ago (3) — jumping more than 25%. Americans are feeling the squeeze — on Reddit, car shoppers vent about prices that seem disconnected from reality.
“Prices in my area are ridiculously overinflated,” one user wrote (4). “I’m waiting for older models to drop in price as ’26 models come in.”
Another pointed out how much has changed: “My mom bought a high trim 4Runner in the early 2000s on a teacher’s salary and had the thing paid off pretty quickly. That would not happen today.” (5)
The sentiment is showing up in buying behavior. Many Americans are thinking twice about purchasing new cars, choosing instead to hold onto their current vehicles longer.
Even if sticker prices held steady, the math still doesn’t work for many buyers.
About 80% of car sales are financed, and the average monthly payment has climbed to $748 according to Experian (6). Nearly one in five buyers now pays $1,000 or more each month — a near-record share, according to Edmunds (7). That’s the result of a 30% increase in car prices and sharply higher interest rates since 2019.
Auto loan rates remain elevated: 6.56% for new vehicles and 11.40% for used cars as of the third quarter, according to the same Experian report. The average APR held at 7% in Q3, marking the third straight quarter at or above that level, according to Edmunds. For buyers already stretched thin, even a modest price increase can push a vehicle out of reach.
“In Q3, affordability in the new-car market remained stretched, with buyers putting less money down, financing more and relying on longer terms to keep monthly costs in check,” said Jessica Caldwell, Edmunds’ head of insights (7). This is the core affordability crisis: even when prices level off, interest costs keep soaring.
Holding onto your current car isn’t necessarily cheap either. Motor vehicle maintenance and repair costs rose 7.7% from September 2024 to September 2025, according to Bureau of Labor Statistics data (8).
“The cheapest car is the one you already have,” one Reddit commenter noted. “Just get it fixed.” That advice makes sense — until the repair bills start piling up.
Here’s where the administration’s promise gets complicated.
An S&P Global analyst told Politico that the average price drop won’t come from vehicles actually getting cheaper (9).
Instead, fewer electric vehicles — which tend to cost more — will be produced. That shift in the sales mix will pull down the average price, but it doesn’t mean the car you want will cost any less.
President Trump this week dismissed broader affordability concerns as a “hoax” and a “con job,” according to the Financial Times (10).
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While the administration touts savings from rolling back fuel standards, its tariff policy could simultaneously be adding thousands of dollars to vehicle costs.
Wall Street analysts have estimated the 25% auto tariffs could add anywhere from $4,000 to $15,000 per vehicle, depending on how much of the car is imported (11). The Yale Budget Lab calculated an average increase of $6,400 per vehicle (12).
Automakers absorbed billions in tariff costs rather than pass them on to buyers immediately. General Motors reported $1.1 billion in tariff costs in the third quarter alone, while Volkswagen faced €800 million (about $880 million) in Q3. Toyota has forecast the largest hit — $9.5 billion for its fiscal year.
But that cushion is disappearing. Cox Automotive reports that as pre-tariff inventory sells through and tariffed vehicles replace it on dealer lots, prices are now “drifting higher” (13). The firm expects retail prices to climb 4% to 8% by year’s end as 2026 model-year vehicles arrive.
“For a majority of the automakers, they’re really taking the tariffs on the chin,” Erin Keating, executive analyst for Cox Automotive, told NPR (14). “Suppliers, too, are taking a beating.”
If you’re in the market for a new car, a $1,000 policy-driven discount probably won’t move the needle much on a $50,000 purchase. But there are ways to take control of the situation.
First, remember that dealers are likely sitting on unsold inventory. That gives you leverage to negotiate — so don’t accept the sticker price without pushing back.
Shop around for financing before you visit the dealership. Banks, credit unions and online lenders may offer better rates than the dealer’s finance office.
And if you can swing it, make a larger down payment or choose a shorter loan term. You’ll pay less in interest over the life of the loan, which can save you far more than $1,000.
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
U.S. Department of Transportation (1); Kelley Blue Book (2); Kelley Blue Book (3); Reddit, r/carbuying (4); Reddit, r/TrueAnon (5); Experian (6); Edmunds (7); U.S. Bureau of Labor Statistics (8); Politico (9); Financial Times (10); CNBC (11); Yale Budget Lab (12); Cox Automotive (13); NPR (14)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
