New car payments just hit a record high. Here’s what you should be spending.

The average monthly payment on a new vehicle has skyrocketed over the past decade. In 2015, the average monthly payment was $491, with the average amount financed at $28,769. Fast forward to the fourth quarter of 2025, and the average monthly payment hit an all-time high of $772, with the typical amount financed reaching a record $43,759, according to data from Edmunds.

This increase in monthly payments can be attributed to a variety of factors, including longer loan terms, buyers willing to pay $1,000 or more a month for a vehicle, and rising insurance costs. As a result, purchasing a new car is becoming less affordable for many consumers, mirroring the challenges of buying a house.

To determine if you are overspending on a new car, experts recommend following certain guidelines. While it is common to see recommendations suggesting that car expenses should be 10% to 15% of your take-home pay, Chase Auto recommends keeping monthly vehicle expenses below 8% of your monthly income. This includes the monthly loan or lease payment, fuel, and insurance.

One key to reducing monthly payments is making a larger down payment. Experts suggest putting down at least 15% to save money on interest and lower your monthly payment. Additionally, consider seeking outside financing from a credit union or bank to potentially secure a better interest rate. Manufacturer incentives, such as low-rate financing or cash-back offers, can also help make a new car more affordable.

When shopping for a vehicle, it is essential to focus on the total cost rather than just the monthly payment. Cars depreciate over time, so overpaying upfront can lead to long-term losses. Be wary of car sales reps who emphasize a low monthly payment without considering the overall cost of the vehicle.

In addition to rising car prices, insuring a vehicle is also becoming more expensive. Average annual insurance costs have increased by 60% from the first half of 2020 to the same period in 2025. Factors contributing to this rise include inflation, vehicles with advanced technology that are more costly to repair, and natural disasters driving up insurance claims.

To mitigate insurance costs, consumers can review their policies for unnecessary coverage or discounts they may be missing out on. Higher deductibles, auto-pay options, and bundling vehicle insurance with home coverage can also help lower premiums. Overall, it’s crucial to carefully consider all aspects of car ownership, from purchase price to insurance costs, to ensure affordable and sustainable ownership.