New data from Edmunds.com showed that 2025 was a year defined by affordability struggles as new and used car prices soared, interest rates remained elevated and buyers took out the longest loan terms seen yet just to get behind the wheel.
The experts are predicting some of those same pressures will roll into 2026, but there also might be some relief ahead — at least in the used car market.
In the new car market, Edmunds is forecasting 16.3 million new-vehicle sales in the United States in 2025 and 16 million in 2026, citing such factors as easing interest rates and, after several years of rapid price escalation, new-vehicle transaction prices have leveled off which will continue to support sales. So while the new car prices will remain high, they should be stable into 2026. 
Edmunds released its fourth-quarter data on Jan. 5 and it showed various records being broken including the highest percentage of new car buyers committing to $1,000 or more in monthly payments, new records for the average monthly payment and new records for the average amount financed.
“Auto financing trends in the fourth quarter underscored just how challenging 2025 was for car shoppers,” said Ivan Drury, Edmunds’ director of insights, in a statement. “Faced with persistently high vehicle prices and borrowing costs, many consumers were forced to adapt by financing larger amounts, stretching loan terms and, increasingly, taking on four-figure monthly payments. The record-setting figures we’re seeing reflect the financial strain many buyers faced throughout the year.”
According to Kelley Blue Book, the average transaction price for a new car in November was $49,814, up 1.3% year over year and mostly unchanged from October’s $49,760. December data is not in yet. But J.D. Power reported late last month the average new-vehicle retail transaction price in December for all vehicles is expected to be $47,104, up $715 compared with December 2024.  Separating out electric vehicles, the average price on non-EV’s rose 1.4% to $46,807 compared with December 2024.
“In total, retail consumers will have spent $620 billion dollars on new vehicles in 2025, up 5.8% from last year,” wrote Thomas King, president of OEM solutions at J.D. Power, in a media release.
More: Will car prices ease in 2026? Here’s what the experts predict.
The Edmunds’ data for the fourth quarter, U.S. vehicles sales for financed vehicle purchases, shows that more car shoppers are agreeing to monthly payments of $1,000 or more than ever before. The share of new-car buyers committing to such monthly payments hit a record high of 20.3% of all financed new-vehicle purchases, up from 18.9% in the fourth quarter 2024.
In the used car segment, 6.3% of buyers committed to $1,000 or more for a monthly payment, also a new record compared with 5.4% in the fourth quarter 2024, according to Edmunds.
This might sound alarming, but it’s been the story throughout 2025. As the Detroit Free Press reported in the second quarter, Edmunds’ data showed the share of new-vehicle buyers to commit to monthly payments of $1,000 or more hit an all-time high then of 19.3%. That was up from 17.8% in the second quarter of 2024.
In metro Detroit, Chevrolet and Ford dealers have said monthly loan terms and payments are much lower here than Edmunds’ national averages because of the popularity of leasing and employee discounts, both of which bring down monthly payments.
Drury explained why some of these records are being broken. First, President Donald Trump’s 25% tariffs on imported autos and auto parts are bumping up prices as many carmakers have rolled the increases into destination fees. As the Detroit Free Press reported last month, most automakers are tacking on increases to the nonnegotiable fee set by the car company cover the manufacturer’s cost to transport the vehicle from the factory to the dealership.
Within the past year, the Detroit automakers have increased the destination charge across their pickup lineups for GMC, Chevrolet, Ford and Ram brands, from $1,995 in the past to $2,595 for 2026 models.
But Drury adds that there are three factors that have a bit more weight than tariffs and fees.
“The seasonal aspect of luxury branded purchases seeing their usual upticks versus the third quarter, this always bumps up fourth quarter numbers, but secondarily, it is the manner of acquisition; more luxury buyers are opting to utilize dealer financing, outside finance or cash/check versus leasing,” Drury said. “With that extra volume of luxury consumers resorting to dealer finance, the mix of what is being financed overall gets a healthy dose of high dollar deals.”
Edmunds data showed that the average monthly payments for new vehicles hit the highest levels ever recorded. The average monthly payment in the fourth quarter on financed new car purchases was $772 compared with $754 in the year-ago quarter.
The average amount financed for new-vehicle purchases soared to a record high of $43,759 compared with $42,113 in the fourth quarter 2024.
Part of the problem is that buyers of both new and used cars put down smaller down payments to help bring down the amount they financed. Edmunds data showed in the quarter the average down payment on a new vehicle was $6,228 compared with $6,856 in the fourth quarter of 2024. For used cars, the average down payment in the quarter was $3,956 compared with $4,219 in the previous yearly period.
Edmunds data also showed that longer loan terms continue to play a big role in helping people finance new cars. Nearly 21% of financed new car purchases were for an 84-month or longer loan in the quarter. The figure is slightly down from 22% in the third quarter, but well above the 17.9% share seen in the fourth quarter 2024, “underscoring consumers’ continued reliance on extended loan terms as an affordability tool,” Edmunds wrote in a statement.
Interest rates eased only slightly. The average annual percentage rate (APR) for new-vehicle purchases was 6.7% in the quarter compared with 6.8% from the fourth quarter 2024, but still near historically high levels and promotional financing continued to be limited in quarter, Edmunds analysts said. The data showed that only 3.1% of new-vehicle loans carried a 0% rate, up slightly from 2.4% in the previous year’s quarter.
Looking ahead, Drury said many of the affordability issues are still in place, including high new-vehicle prices and ongoing economic uncertainty.
“That said, there are early signs of rebalancing ahead,” Drury said. “New-vehicle prices remain high but are beginning to stabilize, lower interest rates could offer some relief for both new and used vehicle shoppers, and an increase in off-lease returns is expected to provide more affordable alternatives in the used market.”
Edmunds said about 400,000 vehicles are expected to be returned as they come off lease this year. Also, the trade-in age on average is rising, which will bring owners back into the market for a newer vehicle.
Still, most analysts believe the auto industry will continue to face economic uncertainty and eroding consumer confidence in 2026 with affordability for new and used cars remaining a core challenge. They have pointed to the impact from Trump’s autos tariffs and rising material costs coupled with the abrupt ending of the federal tax incentive on purchases of electric vehicles — all of which will be fully realized in 2026.
Throw in the renegotiation of the United States Mexico Canada Agreement, the free trade pact that replaced NAFTA during Trump’s first term, and 2026 will face some wild unknowns that could impact the industry.
“If you’re a high-income buyer with good credit, you’ll see choice, availability, and reasonable financing. That’s the good news,” Erin Keating, Cox Automotive executive analyst, told the Detroit Free Press, last month. “But if you’re a median-income household considering a vehicle purchase, the decision is a bit tougher, as you might not have the confidence needed for a big-ticket item.”
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Jamie L. LaReau is the senior autos writer for USA Today Co. who covers Ford Motor Co. for the Detroit Free Press. Contact Jamie at jlareau@freepress.com. Follow her on Twitter @jlareauan. To sign up for our autos newsletter. Become a subscriber.

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