New cars cost nearly $50K on average — $10K more than 5 years ago. Here are the financial realities of buying a new car and how to manage auto financing wisely

Breaking down a $50,000 car loan payment

Since most Americans don’t have the money to cough up $50,000 up front, car loans are often used to facilitate new car purchases. And part of buying a new car is figuring out how much you’ll have to spend in monthly payments.

Annual Percentage Rate

The monthly payment for a $50,000 car loan depends on a few factors, one of the most important being the Annual Percentage Rate (APR) on your car loan and repayment term. In Q4 of 2024, the average APR for a car loan was 6.8%.

If you were to purchase a new $50,000 car without trading in an old vehicle or putting a down payment upfront, a 48-month auto loan with a 6.8% APR would put your monthly car payments at $1,192.68. You could potentially extend the loan term to, say, 60 months, which would cut your monthly payments down to $985.35.

Loans with higher APRs will increase your monthly payment. For example, a 48-month car loan with a 7.4% APR — which was the average in Q4, 2023 — would push your monthly payments up to $1,206.61. For a 60-month car loan, the monthly payment would be $999.52.

So, long story short, you’re going to want to lock in the lowest APR you can before completing that new car purchase. But there are other ways you can also affect the total of your monthly car payments.

Trade-in value

All of the numbers priced out above didn’t include a vehicle trade-in, which could drop the total of your car loan quite a bit, depending on how much a dealership is willing to give you for your old car.

Let’s say you’re purchasing a new $50,000 car and you're trading in your old clunker as part of the purchase. In February, 2023, the average trade-in value in the U.S. was $8,955, so let’s say the dealership is willing to give you just that for your old car. That effectively knocks the price of the new car down to $41,045.

At that price, a 48-month loan with the average 6.8% APR would put your monthly payments at $979.07, while a 60-month loan would have you paying $808.87 per month.

Down payment

Putting money down upfront — combined with the trade-in value of your old car — can also reduce your monthly car payments.

If you were to put down $5,000 — which, combined with the $8,955 trade-in, gives you $13,955 upfront — the price of your car loan drops to $36,045, and monthly payments for 48-month and 60-month loans would drop to $859.80 and $710.34, respectively.

Additional costs to consider

Other costs associated with owning a car include insurance, gas and maintenance.

According to Bankrate, the average cost of a full coverage car insurance policy in February, 2025, was $2,670. A car insurance policy isn’t exactly tied to the cost of your new car, but the make and model of the vehicle will have an effect on how much your insurance will cost.

Gas is also something worth considering before you finalize your new car purchase. The size of the vehicle’s gas tank and its relative gas mileage are things that you may want to think about before you sign on the dotted line.

And then there’s maintenance. According to the American Automobile Association (AAA), car owners spend an average of $1,452 per year — or 9.68 cents per mile — on maintenance and repairs. Luxury cars tend to cost more, though how much you’ll pay to maintain and repair your vehicle can also depend on its make and size.

Kiss your credit card debt goodbye

Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

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How to budget wisely for a new car purchase

To figure out how much you can afford to spend on a new car, take a look at your current monthly income and decide how big your car budget should be. You can base this number on what you’re paying for your current vehicle, or you can stick to what many experts recommend and cap your car budget at 15% of your monthly income.

Using a car payment calculator can also help you determine a budget. Just make sure to remember that your calculation must include the interest that you’ll pay on your car loan.

Another important step is to check your credit score. Lenders consider this to be a major factor in deciding whether they’ll approve you for an auto loan and at what rate. In general, the lower your credit score, the more risky you appear to lenders — and while you may be approved for a loan, your APR may be higher than others with good-to-excellent credit scores.

And then there’s the whole buying-versus-leasing debate. Buying a new car typically includes higher monthly payments, but once you pay off the loan, you own an asset and have built equity in your vehicle. Leasing, on the other hand, can keep monthly payments down, but once your lease is up, you’ll need to lease another vehicle. This could force you into a position where you’re stuck in a cycle of neverending car payments.

You also don’t want to overextend yourself with your loan. Buying a car that really stretches your budget comes with some significant risks — for example, if you can’t afford the monthly payments, you risk missing payments and defaulting on the loan.

There’s a lot to think about when purchasing a new car, but if you do your homework and consider all of the factors mentioned above, you can be a little more confident in your next car purchase.