Walking into a dealership after six years feels like entering a parallel universe where a Honda CR-V costs more than your first house payment. That sticker shock isn’t imaginary—average new-vehicle prices hit $49,191 in January 2026, a record for the month, while monthly payments crossed $800 for the first time ever according to J.D. Power. More jarring: one in five car loans now exceed $1,000 monthly, with S&P Global projecting that ratio to double by year-end.
The $20,000 Car Is Officially Dead
Entry-level vehicles vanished as automakers chase luxury profits over volume sales.
You can’t buy a new car for under $20,000 anymore—period. Nissan killed the Versa in December 2025, eliminating the last sub-$20,000 option from dealer lots. What passes for “affordable” now starts around $30,000, according to NADA, with compact SUVs like the CR-V averaging $36,414.
It’s like searching for a basic smartphone only to find the iPhone Pro Max is your cheapest option.
Wealthy Buyers Drive the Market
High earners dominate sales while middle-class shoppers get priced out systematically.
Here’s the uncomfortable truth: 60% of new car buyers earn over $100,000 annually, with 29% pulling from $150,000+ households—up from just 18% in 2020. This K-shaped recovery means luxury pickups and full-size SUVs keep dealers profitable while everyone else stretches loan terms to 84 months just to afford basic transportation.
“We are approaching a threshold that a lot of people don’t want to go over,” warns Patrick Manzi, NADA’s chief economist.
Extended Loans Normalize Extreme Payments
Seven-year car loans make $1,000 monthly payments feel almost reasonable.
Average loan terms now stretch 68.8 months, with 84-month financing hitting 11.7% of the market—nearly double 2019 levels. These marathon loans transform a $50,000 truck into something that feels manageable monthly, even as you’re essentially paying mortgage-level money for depreciating steel.
“Is there a breaking point where you just push prices past what the average consumer can afford?” asks Tyson Jominy from J.D. Power. We’re about to find out.
Your car costs shopping timeline just got more complicated. Delinquency rates already hit 8.6% for borrowers over 90 days past due—the highest since 2008. The automotive dream of accessible transportation is becoming a luxury item, splitting American mobility along economic lines that feel increasingly permanent.
