How to save money when shopping for a car and other important considerations
(CBS NEWS) – Sources from CBS News say, buckle up for both high gas prices and rising new and used vehicle prices.
The cost of driving is rising with the Iran war, making it more expensive to fill up, while new and used vehicle prices are also giving Americans sticker shock.
Consumers in the market for a new vehicle faced an average new car price of nearly $50,000 in March, according to Kelly Blue Book, marking a 3.5% uptick compared to March 2025. The average new car is also up a whopping 30% compared to 2019, while used cars won’t deliver much savings, either.
The average used car cost $25,390 in March, according to Kelly Blue Book.
Two main factors are contributing to rising car costs. Stubbornly high inflation, which reached 3.8% in April, its highest level in almost three years, is driving up costs across a range of goods and services. Americans are also purchasing larger vehicles, which are more expensive than compact cars.
For many Americans, shelling out $50,000 for a new vehicle is financially impossible.
It’s important to consider your monthly costs when weighing new vehicle financing alternatives. Average auto loan interest rates are at 7%. To bring down monthly payments, some consumers are stretching the terms of the loans. According to Edmunds data, one in four Americans is financing their purchases for 84 months, or seven years.
“People are saying, ‘I want a car, it’s expensive, if I stretch out the payments, then I can afford it monthly,'” CBS News business analyst Jill Schlesinger said.
In the first quarter of 2026, the average monthly payment for a new vehicle shot up to $773 per month, not including auto insurance, according to Edmunds.
“We have plenty of people who are paying $1,000 a month for their car payment,” Schlesinger said.
Do the math
From Schlesinger’s perspective, anyone who can’t afford a five-year loan might be considering buying too pricey of a vehicle.
Some Americans are weighing fixing up their older cars given high car costs. In some cases it’s a wise alternative, but auto experts discourage consumers from investing too much in old vehicles.
Their rule of thumb is not to spend more than half of a car’s value on vehicle repairs or upgrades.
“Let’s say your car is worth $8,000. You’re at the end of the life of the car. Don’t be paying $5,000 to fix the car,” Schlesinger said. “At some point in the life cycle of the car, it’s better to actually go into a brand new car, with a new warranty and then you’ll have some safeguards.”
Leasing versus buying is another consideration for consumers looking to to save money at the auto dealership. Some shoppers who prefer new vehicles with the latest bells and whistles might lean toward leasing a brand-new car. But don’t forget that at the end of the term of the lease, you won’t own the vehicle. By contrast, “at the end of a car loan, you own the car,” Schlesinger said.
Negotiating tactics
Schlesinger said there’s one main way for shoppers to exert leverage over sellers. It’s important to be flexible and consider multiple car brands and dealerships, and to do your research online before visiting a dealership.
But the single most effective bargaining chip at consumers’ disposal is to be willing to walk away from a negotiation.
“That is your gift. If you can walk away, you will be able to negotiate a better deal. Try not to get married to any one dealership and shop around,” Schlesinger said. “The more info you have, the better.”
