The Average Car Price Is Nearing All-Time High

What Is the Average Price for a New Car?

The average price for both new and used cars has increased significantly over the past five years, though they're down slightly from their peaks in 2023 and 2022, respectively. Here's a look at how values have changed over the years.

Average Vehicle Costs, New and Used

The Average Car Price Is Nearing an All-Time High

New car prices have come down in the past few months, but almost reached a record high in December. According to Kelley Blue Book, the average new car price was $49,740, which was just below the all-time high of $49,958 recorded in December 2022.

That said, used car prices are still significantly below their $28,372 peak in April 2022.

In the near term, new car prices are expected to increase again, primarily due to a 25% tariff on imported vehicles. Another 25% tariff on foreign auto parts may drive prices even higher, even as the Trump administration provided the auto industry some concessions for other import taxes.

While some dealers are still selling pre-tariff inventory without price hikes, that may not last more than a few months. As new car prices spike, demand for used cars may increase and lead to price increases in that market as well.

Learn more: Should You Buy a Car in 2025?

Average Car Price by Car Type

The price you can expect to pay for a new car can depend on the type of vehicle you purchase. For example, the price of a subcompact car averages $23,359, while high-end luxury cars average nearly $120,000.

Here's a look at the average price for different vehicle types:

Source: Cox Automotive data as of March 2025

Car Loan Trends

According to Experian's State of the Automotive Finance Market report from the fourth quarter (Q4) of 2024, 80.37% of new car buyers financed their purchase, and that number has stayed relatively flat for the past three years.

Meanwhile, only 36.5% of used car buyers used a car loan, and that figure is down from 41.61% in 2022.

While interest rates and monthly payments have been relatively high in the past few years, they're starting to come down. Further rate cuts by the Federal Reserve could help reduce interest rates even further.

Here's a look at the current averages for both new and used car loans:

Source: Experian data as of Q4 2024; credit scores calculated using VantageScore^® 4.0

How to Negotiate the Best Price on a New Car

If you're looking to buy a new vehicle, it's important to negotiate the sales price with the dealer to ensure you get the best possible deal. Here are some steps you can take to get an advantage in negotiations:

• Research prices. For used cars, you can use resources like Kelley Blue Book and J.D. Power to research prices to compare what dealers are asking for.
• Ask about incentives. With new vehicles, you might have less wiggle room on the price, but you can ask about 0% APR financing offers, cash rebates and other incentives. Even some certified pre-owned vehicles may come with incentives.
• Shop around. Don't be afraid to check prices with multiple dealers to ensure you get the best offer. You can even use competing prices to negotiate a better price with the dealership that you ultimately choose.
• Get preapproved for an auto loan. Dealers often try to focus on the monthly payment rather than the sales price. Getting preapproved for an auto loan beforehand gives you a firm budget and makes it easier to steer the conversation back toward the price tag.
• Decline dealer add-ons. Dealers may try to push a number of add-ons, such as prepaid maintenance plans, service contracts and various cosmetic improvements. However, you rarely need these extras.
• Don't be afraid to walk away. If a dealer is unwilling to negotiate on the price or won't agree to the highest price you're willing to pay, it may be in your best interest to walk away. In some cases, just suggesting an end to the conversation could get the dealer to budget. But if not, you can try with another dealer.

Learn more: How to Negotiate the Price of a Car

The Bottom Line

Car prices still remain significantly higher than they were before the pandemic, and due to the federal government's current tariff policies, they're expected to rise even higher in 2025.

That said, it's possible to still get a good deal on a new or used car if you're willing to research different vehicle types and negotiate with dealers. Improving your credit is also an important step in qualifying for a low interest rate on a car loan.

With Experian, you can get free access to your Experian credit report and FICO^® Score^☉, making it easier to evaluate your credit health and get insights into how you can increase your credit score.