Average Americans who want wheels can’t afford the car that goes with them. How to buy a car without breaking the bank

Core Insights - A decline in auto sales is anticipated, with new car sales projected to drop by 2.4% and used car sales by 0.9% in 2026, following a stagnant 2025 [1] Group 1: Market Trends - The auto industry is experiencing a K-shaped economy, where wealthier consumers continue to thrive while lower- to middle-income earners are reducing their spending on significant purchases like cars [4] - The average price of a new car reached a record $50,000 by September, impacting average households' purchasing decisions [3] Group 2: Economic Factors - Tariffs imposed during the Trump administration are increasing the costs of foreign-built cars and parts, contributing to higher car prices [5] - High interest rates are affecting car sales, with the average 5-year auto loan interest rate at 7.64% as of August, compared to 5.15% in 2020 [5] - Consumers are opting for longer loan terms to manage monthly payments, but monthly payments remain high due to reduced incentives from automakers, which are currently at 6.7% compared to 8% pre-pandemic [6] Group 3: Supply Chain Issues - Pandemic-related supply chain disruptions have led to lower car production, resulting in a tighter supply of nearly new cars and consequently higher prices for used vehicles [7]