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

The average monthly payment on a new vehicle in 2015 was $491. The average amount financed: $28,769.

Now, some 10 years later, the average monthly payment in the fourth quarter of 2025 hit an all-time high of $772, with the typical amount financed also hitting a record $43,759, according to Edmunds.

Longer loan terms, buyers paying $1,000 or more a month for a vehicle than ever before, and higher insurance costs — buying a new car may be reaching the limits of affordability, mirroring the other classic American dream in some ways: buying a house.

Are you overspending on a new car? Here’s how to tell.

While it’s common to see vehicle budget recommendations that say you should spend 10% to 15% of your take-home pay on car expenses, Chase Auto, the financing arm of Chase Bank, has a slightly more stringent view, advocating for monthly vehicle expenses that don’t exceed 8% of monthly income.

That budget includes the monthly loan or lease payment, fuel, and insurance.

Read more: Buying an electric car? What to know about EV insurance costs.

Keith Barry, senior autos reporter for Consumer Reports, said the biggest key to a more affordable monthly payment is the down payment.

“We recommend putting down at least 15%,” Barry said. “This saves you money on interest and lowers your monthly payment. You can also get outside financing. Don’t just go with what the dealership tells you — check with a credit union or your own bank. And if you have a high interest rate, you can refinance and save serious money.”

Of course, manufacturer incentives, such as low-rate financing or cash-back offers, can play a big role in affordability, Barry noted.

“We’ve found that the most attractive deals tend to be on less popular vehicles, such as sedans and small hatchbacks,” he added. “Keep in mind that automakers are also likely to offer steep discounts on their slowest-selling models, which may include those with low resale value and higher repair bills, potentially erasing any up-front savings quickly.”

And when shopping for a vehicle, what should buyers focus on: the monthly payment or the total cost?

Barry explained that the total cost of the car is the primary factor to consider. Many car sales reps will highlight a “low monthly payment,” steering your attention away from the actual cost of the vehicle.

“Because cars depreciate, overpaying will exacerbate your long-term losses,” he warned. “You could end up underwater on your loan, which could come back to haunt you if/when you decide to trade it in for your next car.”

Read more: Cheapest car insurance in the U.S. in 2026

Insuring a car or truck is getting more expensive too. From the first half of 2020 to the same period in 2025, average annual insurance costs rose 60%, according to the Bureau of Labor Statistics.

AAA says the increases are not only due to inflation, but also to other factors, including vehicles packed with technology that are more expensive to repair. Frequent natural disasters and storms also drive up insurance costs.

There are other pricing pressures, such as:

Lender-required coverage for more expensive vehicles that are financed or leased

The cost of comprehensive insurance claims, which are for non-accident-related damage, such as weather-related crashes, theft, or vandalism

The claim volume in your area or state

AAA advises consumers to review their policies for coverage that is no longer required or for discounts they’re not receiving, such as those for low-mileage drivers.

Higher deductibles, auto-pay options, and bundling vehicle insurance with home coverage can also lower premiums, AAA reported.

In the Edmunds report on new-vehicle financing, director of insights Ivan Drury said that buyers may get a small break in affordability in 2026.

“New-vehicle prices remain high but are beginning to stabilize, lower interest rates could offer some relief for both new- and used-vehicle shoppers, and an increase in off-lease returns is expected to provide more affordable alternatives in the used market.”