Cars have become unaffordable for many Americans. Here’s what the numbers show.

U.S. consumers are facing a squeeze on car affordability as higher prices and borrowing costs combine to push the average used vehicle past several commonly referenced affordability thresholds. Analysts and consumer advocates use a variety of measures — such as a share of household income, monthly-payment limits relative to earnings, or debt-to-income ratios applied by lenders — to determine whether a vehicle purchase is affordable. Under current market conditions, the benchmark costs for the typical used vehicle breach some of these measures, meaning that a purchase which would once have fit comfortably within standard guidelines now may not.

Higher retail prices for used cars have been driven in part by pandemic-era supply disruptions and sustained consumer demand, while rising interest rates have increased the monthly cost of financing a vehicle. Together, these factors lift both the sticker price and the financing burden. For buyers who finance their cars, elevated rates translate into larger monthly payments and higher total interest paid over the life of a loan, making otherwise attainable models harder to justify under conventional affordability rules.

The effect is not uniform across the population. Households with stronger incomes or higher credit scores may still meet lender thresholds for loans, while lower-income buyers or those with weaker credit histories face the most acute affordability problems. The crossover of the average used-vehicle cost above affordability measures suggests that a sizeable segment of potential buyers could delay purchasing, opt for older or riskier vehicles, increase reliance on alternative transportation, or seek longer loan terms and other concessions to lower monthly payments.

Policymakers, lenders and consumer groups monitor these shifts because they can influence borrowing risk, household financial stability and broader consumer spending. When a common purchase such as a used car becomes widely unaffordable by established metrics, it can reverberate through credit markets and local economies as consumers adjust their spending and financing behavior.