- A key measure of affordability — how long Americans must work to pay for a new car — is climbing again after months of declines
It grew harder for Americans to afford a new car in September. Automakers and dealers offered more discounts than they had in August, but they weren’t enough to offset a spike that pushed the final sale price of the average new car over $50,000 for the first time.
Price is one way to measure affordability. We think time is a better way.
Few Americans can afford to buy a new car with cash. Most borrow to buy, then work to pay down the debt. Economists from Kelley Blue Book’s parent company, Cox Automotive, measure that time with a tool called the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.
The index measures how long the average earner would have to work to pay off the average new car loan.
It hovered between 33 and 36 weeks for most of the decade before the COVID-19 pandemic changed the fundamentals of the American economy. It went over 44 weeks at its pandemic-era peak. For much of 2025, it trended back down toward the historical norm.
It’s rising again. The average earner needs to work 37.4 weeks to pay off the average car bought in September.
A Price Spike May Be Temporary
- Dealers and automakers are discounting cars, but can’t keep pace with rising prices
- The end of the government’s electric car tax credit may have caused a temporary price hike
“Higher incentives and income growth weren’t enough to offset September’s new-vehicle price increase,” explains Cox Automotive Chief Economist Jonathan Smoke. “Even though incentive spending was at its highest level this year, the average transaction price for a new vehicle reached a record $50,080.”
That figure may be temporary. At the end of September, a $7,500 tax credit on electric vehicles (EVs) disappeared. The impending end of the credit triggered a spike in sales of expensive EVs that will likely fade this month, bringing the average sale price back down.
However, other factors, such as tariff costs to the normal inflation we see with each new model year, will not end.
The typical monthly payment for a new vehicle increased 1.9% to $766, marking the highest monthly payment in 15 months and up 1.2% year over year. Monthly payments peaked in December 2022 at $795.
