--- title: Most American Households Can't Afford the Average Used Car description: Increases in used auto loan rates have made it so only U.S. households in the top 40% can afford the average used car, per a new report. authors: - name: Pete Grieve role: Lead News Reporter url: https://money.com/author/pete-grieve/ bio: Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market. education: University of Chicago, BA Political Science at_money_since: 2022 articles: 602 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes social: - https://twitter.com/pete_grieve - https://linkedin.com/in/pete-grieve-b5aa02138 - https://www.facebook.com/petegrieve4 editors: - name: Julia Glum role: Managing Editor url: https://money.com/author/julia-glum/ bio: Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. education: University of Florida at_money_since: 2018 articles: 453 covers: - Economy and Politics - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Education - Health and Wellness - Housing - Identity Theft - Insurance - Investing - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - Newsweek - International Business Times - CBS News - Good Morning America - WUSA9 - Pix 11 - The New York Times - Mashable - The Washington Post - CNBC - Politico social: - https://x.com/superjulia - https://www.linkedin.com/in/julia-glum published: '2024-02-15T20:36:12.000Z' modified: '2024-02-15T20:36:12.000Z' section: Economy and Politics tags: - News word_count: 410 canonical: https://money.com/used-car-costs-unaffordable/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo Collage of an aerial view of a car laying on top of a giant "For Sale" sign](https://img.money.com/2024/02/News-Used-Cars-Affordability.jpg) The cost of an average used car is now out of reach for most Americans. Following recent increases in used vehicle loan rates, only households earning in the top 40% can afford the average used car, according to a new [report](https://getjerry.com/studies/most-americans-cant-afford-even-one-average-price-used-car) from car ownership app Jerry, which describes an “affordability crisis that runs wide and deep.” Per the study’s definition of affordability, you shouldn’t spend more than 17.5% of your after-tax income on cars. (That includes the monthly payment and operating expenses like gas and insurance.) Jerry says the average annual costs for a used car come in at about $12,200. ## New or used, your car is an investment. Make sure it's protected! ### Get the coverage you need without breaking the bank. Click your state to get a free quote today. [View Rates](https://money.com/pr/u2990e3ad5c8?ap_referrer=%2Fused-car-costs-unaffordable%2F) For a median-earning household with about $64,000 of real after-tax income, paying that sum would mean spending 19% of their earnings on a used car. In other words, the once-frugal choice of transportation is now slightly out of budget. “That’s a single average used car — never mind two — in a country where a car is a necessity for nearly every working adult,” the report says. The analysis indicates that many used car shoppers only have two options: Drive a cheaper car or borrow more than they should. ## How much does a used car cost? According to Experian data released in December, used car buyers pay an average of $533 per month in loan payments for their vehicles. That’s an increase from $473 per month in 2021. What’s changed? For one thing, the average amount financed increased over that two-year period, rising from $26,305 to $27,167. But the real difference-maker is used [auto loan rates](https://money.com/best-auto-loan-rates/), which rose to 11.35% at the end of 2023 — a surge from 8.06% in 2021. Auto loan rates increased as a result of the Federal Reserve's rate hikes in response to inflation. Fortunately, used vehicle affordability may improve in 2024. Rates could drop by as much as a full percentage point if inflation continues to slow, according to Cox Automotive. Already, prices for used vehicles are trending down, having fallen 3.5% in the past year, according to the latest consumer price index data. There's light at the end of the tunnel. "Likely declines in new and used vehicle prices should improve affordability, especially in the second half of the year,” Jonathan Smoke, chief economist at Cox, wrote in a recent [report](https://www.coxautoinc.com/market-insights/the-fed-signals-end-of-tightening-era/). ![](https://s3.consumersadvocate.org/prd/image/image/29780/medium_e439fd1c-3ee2-41b2-bccf-5dfe3c4d8add.png) Protect your vehicle with affordable Car Insurance. [View Rates](https://money.com/pr/b046d48341c1?ap_referrer=%2Fused-car-costs-unaffordable%2F) ```json { "@context": "https://schema.org", "@graph": [ { "@type": "BreadcrumbList", "@id": "https://money.com/used-car-costs-unaffordable/#breadcrumb", "itemListElement": [ { "@type": "ListItem", "position": 1, "name": "Home", "item": "https://money.com" }, { "@type": "ListItem", "position": 2, "name": "Economy and Politics", "item": "https://money.com/economy-and-politics/" }, { "@type": "ListItem", "position": 3, "name": "Auto Industry", "item": "https://money.com/auto-industry/" }, { "@type": "ListItem", "position": 4, "name": "Most American Households Can't Afford the Average Used Car" } ] }, { "@type": "WebSite", "@id": "https://money.com/#website", "url": "https://money.com", "name": "Money", "publisher": { "@id": "https://money.com/#organization" } }, { "@type": "WebPage", "@id": "https://money.com/used-car-costs-unaffordable/#webpage", "url": "https://money.com/used-car-costs-unaffordable/", "name": "Most American Households Can't Afford the Average Used Car", "isPartOf": { "@id": "https://money.com/#website" }, "datePublished": "2024-02-15T20:36:12.000Z", "mainEntity": { "@id": "https://money.com/used-car-costs-unaffordable/" }, "inLanguage": "en-US", "breadcrumb": { "@id": "https://money.com/used-car-costs-unaffordable/#breadcrumb" }, "dateModified": "2024-02-15T20:36:12.000Z" }, { "@type": "NewsArticle", "headline": "Most American Households Can't Afford the Average Used Car", "articleSection": "Economy and Politics", "image": [ { "@type": "ImageObject", "url": "https://img.money.com/2024/02/News-Used-Cars-Affordability.jpg", "width": 2707, "height": 1805, "caption": "News-Used-Cars-Affordability" } ], "author": [ { "@type": "Person", "name": "Pete Grieve", "url": "https://money.com/author/pete-grieve/", "@id": "https://money.com/author/pete-grieve/#author", "description": "Pete Grieve is a personal finance reporter. In his time at Money, Pete has covered everything from car buying to credit cards to the housing market.", "image": "https://img.money.com/2023/02/peter.png?w=350&h=430&crop=1", "email": "peter.grieve@money.com", "jobTitle": "Lead News Reporter", "alumniOf": "University of Chicago, BA Political Science", "sameAs": [ "https://twitter.com/pete_grieve", "https://linkedin.com/in/pete-grieve-b5aa02138", "https://www.facebook.com/petegrieve4" ], "worksFor": { "@id": "https://money.com/#organization" } } ], "publisher": "https://money.com/#organization", "datePublished": "2024-02-15T20:36:12.000Z", "description": "Increases in used auto loan rates have made it so only U.S. households in the top 40% can afford the average used car, per a new report.", "abstract": "Increases in used auto loan rates have made it so only U.S. households in the top 40% can afford the average used car, per a new report.", "@id": "https://money.com/used-car-costs-unaffordable/", "inLanguage": "en-US", "dateModified": "2024-02-15T20:36:12.000Z", "editor": [ { "@type": "Person", "name": "Julia Glum", "url": "https://money.com/author/julia-glum/", "@id": "https://money.com/author/julia-glum/#author", "description": "Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. ", "image": "https://img.money.com/2021/10/a_julia-glum.jpg?quality=85&w=400&h=440&crop=1", "email": "julia.glum@money.com", "jobTitle": "Managing Editor", "alumniOf": "University of Florida", "subjectOf": [ { "@type": "WebPage", "url": "https://www.newsweek.com", "name": "Newsweek" }, { "@type": "WebPage", "url": "https://www.ibtimes.com/", "name": "International Business Times" }, { "@type": "WebPage", "url": "https://www.cbsnews.com/news/home-office-tax-deduction-who-qualifies/", "name": "CBS News" }, { "@type": "WebPage", "url": "https://www.goodmorningamerica.com/living/story/coupon-queen-woman-tik-tok-share-tips-couponing-66302189", "name": "Good Morning America" }, { "@type": "WebPage", "url": "https://www.wusa9.com/video/entertainment/television/programs/great-day-washington/tips-to-being-better-with-money-in-2021/65-a5b83e05-73ba-4d60-b9a8-1d47f9ac6018", "name": "WUSA9" }, { "@type": "WebPage", "url": "https://pix11.com/news/coronavirus/rebound/making-ends-meet/millenials-taking-biggest-financial-hit-from-pandemic/", "name": "Pix 11" }, { "@type": "WebPage", "url": "https://www.nytimes.com/2019/09/10/opinion/active-shooter-drill-schools.html", "name": "The New York Times" }, { "@type": "WebPage", "url": "https://mashable.com/article/forrest-fenn-treasure-found", "name": "Mashable" }, { "@type": "WebPage", "url": "https://www.washingtonpost.com/news/post-nation/wp/2014/08/13/theres-an-app-for-that-authorities-say-man-asked-siri-for-help-dumping-body/", "name": "The Washington Post" }, { "@type": "WebPage", "url": "https://www.cnbc.com/2020/06/08/treasure-buried-by-forrest-fenn-finally-found-after-10-years.html", "name": "CNBC" }, { "@type": "WebPage", "url": "https://www.politico.com/tipsheets/florida-playbook/2017/03/gillum-for-governors-rollout-stumble-florida-woman-gets-trump-shout-out-rubios-tampa-office-problems-218973", "name": "Politico" } ], "sameAs": [ "https://x.com/superjulia", "https://www.linkedin.com/in/julia-glum" ], "worksFor": { "@id": "https://money.com/#organization" } } ], "wordCount": 410, "keywords": [ "News" ], "about": [ { "@type": "Thing", "name": "Political economy", "sameAs": [ "https://en.wikipedia.org/wiki/Political_economy" ] }, { "@type": "Thing", "name": "Automotive industry", "sameAs": [ "https://en.wikipedia.org/wiki/Automotive_industry" ] } ] } ] } ```