New car prices soar to historic high as buyers face mounting sticker shock
Average monthly payments climb to $766 as interest rates remain elevated for auto loans
Eric RevellNovember 22, 2025 7:00am ESTCar prices are trending up and the average cost of a new car is at an all-time high, approaching the $50,000 mark for the first time.
The average transaction price for a new vehicle in October was $49,105, according to data from Edmunds. That represents a year-over-year increase of 3.1%.
"This has been something that we've all been waiting for, I don't think anyone was ever expecting the number to go down," Ivan Drury, director of insights at Edmunds, told FOX Business. "It coincided with a high share of EVs being sold, so naturally, EVs being more expensive it kind of pushed us over the edge."
"Strip all that away, there's virtually no vehicle you can buy today that is cheaper than it was from last year, two years ago, five years ago," Drury said. "The average age of trade-in toward a new car is like five and half to six years old right now. People who bought in 2020 and 2019, and especially 2019 for prices, they're definitely in for sticker shock."
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New car prices are approaching an average of $50,000 for the first time, creating challenges for buyers. (David Paul Morris/Bloomberg via Getty Images / Getty Images)
"If you're a customer with a trade-in, and you haven't been to the dealership for anything other than service in six years, you're going to be floored by seeing the average transaction price being nearly $10,000 more than the last time you bought," Drury added.
Average monthly payments on new vehicles sold in October saw a similar increase of 3.2% from a year ago and amount to $766 per month. Interest rates ticked slightly lower, as the average APR declined from 7% to 6.9% in October.
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New car prices are significantly higher than they were five to six years ago, leaving buyers facing sticker shock when they look to trade in a vehicle. (iStock / iStock)
Drury said there has been a noticeable downward trend with interest rates on new auto loans below 7% for the first time since last December, but noted that car shoppers with a six-year-old car likely had a loan that was around 4% or 5% – meaning a new auto loan will be noticeably more expensive to finance.
"The average interest paid over the life of a loan today, your average amount to be financed at $43,000; a 72-month term is the most frequent; you're looking at like $9,500 in interest alone – so you're not even paying for the car at that point, that's a privilege to borrow," Drury said.
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Dealerships have increased discounts amid rising sticker prices and elevated interest rates.(David Paul Morris/Bloomberg via Getty Images)
Auto dealers have increased the average discount available to buyers, though those have offered modest relief. The average discount was $1,985 in January, hit its highest level of the year to date at $2,262 in June, and was $2,240 in October.
"For dealerships, they are resorting back to providing discounts. They are getting money from automakers to put cash on the hood," Drury said.
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"The average vehicle is sitting on a lot for about 60 days, which is considered acceptable for industry standards. But it also touches upon time on the lot, which dealers don't want them sitting there that long because, while it's acceptable – optimal is, of course, lower, the fewer days on the lot, the better for them," he said.
