New Cars Just Got Less Affordable As Monthly Payments Hit A Nearly 3-Year High

As if buying a new car was not already financially straining enough, things are looking even worse. The Cox Automotive/Moody's Analytics Vehicle Affordability Index (VAI) for September 2026 revealed that the average car payment hit $776 per month — the highest since December 2023 and only slightly lower than the peak car payment of $795 in December 2022. Individually, car loan payments are primarily calculated based on things like the loan amount, loan term, and interest rate. However, broader economic factors — like vehicle prices, interest rate trends, and household income – can also affect car payment affordability.

A $776 payment is likely well above what many households can comfortably afford, especially considering Kelley Blue Book (KBB) recommends limiting your monthly car payment to about 10% of your net monthly income. The U.S. Census Bureau reported that the median post-tax income for U.S. households in 2025 was $76,060, allowing for a maximum affordable monthly car payment of roughly $633. While financing can help — and even strengthen your credit score at the same time if you make your payments on time — your monthly payments still need to fit your budget. 

Overall, the VAI estimated that a new car purchase would require 35.7 weeks of median household income in September 2026, up slightly from 35.5 weeks in August 2026. So, before committing to a new car, consider whether a more affordable option, like leasing or buying a used car with cash, might make more sense.

A study by KBB found that new car purchases in September 2026 averaged $50,562, just below the all-time high of $50,614 from December 2025. While price increases are expected toward the end of the year — due to new model years becoming available and pushing up prices — September's year-over-year increase of less than 1% was actually smaller than usual. This is largely because Americans are trending toward more affordable vehicles, and because 2027 vehicles are hitting dealership lots slower than in previous years. Regardless, increased car prices require would-be car buyers to take out larger loans, leading to higher costs — especially amid rising loan terms.

In fact, the VAI found that the average car loan interest rate was 9.45% in September 2026, down by only one basis point from August 2026 and nine basis points from September 2025. However, this slight change wasn't enough to offer much relief, especially when you consider that the Bureau of Economic Analysis found that disposable personal income increased just 0.2% in September — not nearly enough to make car payments suddenly affordable. And, while incentives like dealership discounts did rise from August to September, they were still 8.8% lower than they were in September 2025.