New cars are so expensive that a six-figure salary barely cuts it
The price of a new car in the United States has soared to such a level that even households earning six figures can struggle to afford one without depleting their budget. With the the average sticker price of a new vehicle hovers around the $50,000 mark, and many popular SUVs, electrified models and luxury trim variants topping out at $55,000 or more, what once seemed like a comfortable middle-class purchase now often seems out of reach for many buyers.
This price increase reflects broader trends in the auto market: higher material and manufacturing costs, greater technology and safety content, and consumers increasingly opting for larger, more equipped vehicles. But the net result is the same; The newest cars offer more value and capability than ever, but their cost has exploded faster than wages for most Americans.
For many households, this means considering used vehicles, extended financing terms, or settling for basic trims rather than the equipped, comfortable cars they really want. In a market where the starting price of a new car now rivals, or even exceeds, those that were once considered premium brand vehicles, providing reliable transportation has become a more complex financial decision than before.
In order to provide you with the most current and accurate information possible, the data used to compile this article comes from various manufacturer websites and other authoritative sources, including Kelley Blue Book and Forbes.
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The average new car buyer in the United States pays around $50,000.
Average is unaffordable for most Americans
For some time now, the average price of a new car in the United States has hovered around $50,000, with new car prices hitting a record high in December. Rising new car prices are a major problem, with the affordability crisis worsening by the day. When you take into account what the average American earns, the “average” price is way beyond what most people can actually afford.
People are spending way too much on new cars
According to Kelley Blue Book, new car buyers spent approximately $49,191 in January 2026, which is pretty absurd. This is actually a 2.2% decrease from December, when shoppers spent $50,326. A drop in prices in January is generally expected, as Americans typically buy more luxury cars in the last month of the year, pushing the average higher.
How much do you need to earn to have “average” means?
The general rule of thumb is that you should only spend about 10-15% of your net income on transportation. On average, people opt for longer car loan terms when it comes to financing, with most opting for the 72-month plan. However, it is recommended to opt for a shorter loan term if you can afford higher monthly payments.
If you do the math, you’ll need to bring in a little over $80,000 to be able to afford the monthly car payments of $49,000, assuming the loan term you opt for is 72 months. As mentioned above, it is recommended to take out a loan for a lower duration. However, with shorter loan terms, you’ll need to earn a six-figure salary to be able to comfortably afford a car at that price.
According to Forbes, the average annual salary in the United States currently stands at $64,505, which is well below the salary you would need to afford the “average” new car.
You choose what you buy
Obviously, you don’t have to buy at the price of an average new car. Compact SUV buyers tend to spend less money on a new car, with the average purchase price of a compact SUV sitting at around $36,414 as of January 2026. This is probably one of the smartest segments to buy in, with tons of comfort and practicality offered at a reasonable price.
Meanwhile, full-size pickup truck buyers tend to spend considerably too much money on their vehicle. The average full-size truck buyer spent about $70,000 on their vehicle last month. Given the popularity of this segment, this obviously increases the average.
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The sub-$20,000 car is gone and unlikely to ever come back
Cheap cars are becoming increasingly rare
The disappearance of new cars priced at $20,000 has contributed to the increase in the average price of new cars. There used to be many options that you could get for under $20,000, but in 2026, every single one of those options has been removed from the market. Given the state of the industry, it’s unlikely we’ll see a new car fill that gap anytime soon.
All automakers have ended production of their cars under $20,000
Not so long ago, you had several choices when it came to buying a car for less than $20,000. In 2023, there was the Kia Rio, Mitsubishi Mirage and Nissan Versa. Kia was the first of these three automakers to discontinue their car, with the 2023 model being the last. The Mirage was next, with Mitsubishi ending production in 2024. The Nissan Versa was the last to be retired, with the cheap Japanese compact car being discontinued at the end of 2025.
While you can still find some Versa models at dealerships that still list prices under $20,000, these will be the last of their kind. Given the rarity of the base S version, there may not even be any left. What is certain is that in a few months, there will be no more new cars on any lot at this price level.
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There are still some great, affordable options that won’t break the bank
You Can Still Get a Nice Car for Under $25,000
Even though the list of affordable cars seems to be shrinking quickly, there are still a number of very good options if you’re willing to stretch your budget up to $25,000. Even though the average price of a new car is incredibly high, you don’t need to buy at that price to get something nice.
The cheapest new cars in 2026
|
Model |
Starting MSRP |
|---|---|
|
Kia K4 2026 |
$22,290 |
|
2026 Nissan Sentra |
$22,600 |
|
2026 Hyundai Elantra |
$22,625 |
|
2026 Toyota Corolla |
$22,925 |
|
Volkswagen Jetta 2026 |
$23,995 |
While it’s sad that the $20,000 car is gone for good, there are still a ton of truly affordable cars on the market. There are some great options that start under the $25,000 mark, the most affordable of those listed above. Given their affordable price, most of them will exceed your expectations for comfort and practicality.
