$806 Payments. 84-Month Loans. This Is the 2026 Car Market

Chances are that if you’re reading this, you’re a car dork. You browse sites like this one, argue about cars online, and scroll classifieds for fun, judging both the car and the seller. On weekends, you either wrench on a never-ending project or stand around a parking lot with coffee, looking at other people’s projects. Passion or addiction, you’re not entirely sure.

It’s easy to forget that most people are not like us. To them, cars are appliances. Tools. Transportation. They don’t know their oil weight, and they definitely don’t know the torque spec for their lug nuts. They may not even be able to tell the difference between a Chevy HHR and a Chrysler PT Cruiser. And yet, those people buy cars. In fact, automakers care far more about them than they do about us.

The New York Auto Forum is a daylong conference held just before the New York International Auto Show press days. It’s backed by companies like JD Power, S&P, NADA, and Cox Automotive, and it brings together everyone from dealer principals and analysts to OEM executives and media.

The presentations focus on retail strategy, dealer relations, and how to sell more cars more efficiently. But what stood out most to me wasn’t the strategy. It was the data, the trends, and the outlook. This data comes from JD Power, with some figures updated since the forum. Similar trends are being reported by Edmunds.

While enthusiasts like us might go to the ends of the earth to get a $3,000 shitbox Volkswagen, regular buyers, let’s call them “normies,” want deals too. There’s an entire multi-billion-dollar industry built around convincing them they’re getting one. But the data presented at the New York Auto Forum told a somewhat different story. And if you care about finances, it’s not a particularly comforting one.

Market Ups and Downs

Let’s start with the market itself. In the first quarter of 2026, the average transaction price for a brand new car was $45,800 according to JD Power. The annualized vehicle sales ran at 3.7 million units, split between 2.9 million retail and 0.7 million fleet, down 9 percent from the first quarter of 2025. The industry will argue that some of that decline reflects demand being pulled forward by EV incentive changes and tariff-related buying behavior, but even with that context, the trend is clearly heading south.

Lower sales result in more vehicles sitting on dealer lots. That inventory is currently holding steady at around 2.2 million vehicles. To help things move along, manufacturer incentives rose slightly from roughly $3,200 to over $3,400 per vehicle, yet total consumer spending on new cars fell seven percent to $136 billion.

Dealers directly felt this impact. Total retailer profit dropped ten percent to $6.1 billion, though profit per vehicle remained surprisingly resilient at roughly $2,200 per unit, down just two percent. Those numbers matter to the auto sales industry. But what mattered more to me was what they revealed about the customers behind them.

Normie Affordability

The industry term is “affordability,” which represents how manageable a new vehicle purchase appears to the average buyer after enough financing gymnastics have been applied to the spreadsheet. The average monthly lease payment for a new car is now $650, up a relatively modest $14 over the past few years. More shocking is the average monthly finance payment, which has climbed to $806, up $125 since 2022. Adding to the insanity is the fact that almost 20% of buyers now have monthly payments over $1000. That’s not luxury territory anymore, that’s the market.

The numbers get worse when you look at how that payment is being achieved. The average new-car loan now stretches to 70 months. 72-month loans account for 40.5% of all sales, up 4.1 percentage points since March 2019. Worse still, 13% of buyers are signing for loans of 84 months or longer, up from 7.3% in March 2019. Subprime borrowers now account for about 11% of all loans and leases, the highest level in roughly a decade.

This brings us to how long the normies actually keep their cars. The average trade-in is now just 4.3 years (52 months) old and worth $28,700, meaning buyers are cycling through relatively new vehicles. But the average owner has just $6,700 of equity in said car. That means the typical trade-in customer still owes roughly $22,000 on the car they’re unloading. I physically choked on air when that slide went up.

Affordability Isn’t Equal

The longer loans have another hidden cost in them: interest. A 60-month loan carries an average interest rate of 4.96%. But since the market has aggressively shifted toward longer loans, the 72-month loan comes with a rate of 7.21%. If you pull the emergency lever for an 84-month term, a segment that has nearly doubled since 2019, the rate spikes to 8.53%. You’re essentially paying a 3.5% interest penalty just for the privilege of lower monthly overhead.

Adding to the affordability factor are fuel costs. Until March of this year, monthly consumer fuel costs, assuming 15,000 miles per year driven, were trending down from the height of $207 per month in 2022 to about $137 per month in 2026. However, that changed with the start of the Iran conflict, which drove fuel costs back up to about $186 per month and climbing. That’s an increase of almost $600 per year.

That number makes more sense as a percentage of income. The median U.S. household earns about $85,000 annually, putting fuel costs at roughly 2.8 percent of income. The median new-car buyer, however, earns approximately $153,000 per year, reducing that burden to about 1.5 percent. In other words, fuel costs matter less to the people buying new cars, which helps explain all the huge SUVs surrounding your rusted Miata at a light.

That stands in contrast to lower-income buyers, and this was a consistent theme throughout the presentations. Job growth and wage growth were described as weak, unemployment among younger workers and minority groups is rising, and disposable income is under pressure. Meanwhile, loan delinquencies continue to climb. For that segment of the market, affordability is starting to look a bit optimistic.

The Silver Lining for Dorks

So, is there any hope for us dorks in this sea of $800 monthly payments?
Maybe. Retail inventory has finally stabilized at around 2.2 million units, more than double the lows of 2022. More importantly, roughly 2.4 million vehicles are scheduled to come off lease this year, nearly half a million more than in 2025.
That means a wave of relatively new cars hitting the market. While the normies are busy stretching to make a $46,600 appliance work, that influx of lease returns might finally start putting some downward pressure on used prices.

What “Affordability” Really Means

So, what does all of this mean? For car dorks, the idea of “affordability” has always meant finding something interesting at a price that makes sense. That’s the game. But for most normal buyers, affordability means something else entirely. It means figuring out how to make a $46,000 car fit into a monthly payment, even if it takes seven years and leaves little margin for error.

The reality is that most buyers aren’t really shopping for cars. They’re shopping for monthly payments. The price of the car almost doesn’t matter as long as the number at the bottom works. The algebra is simple. A $50,000 car financed over 36 months at 4.25% is a $1,481 payment. Stretch that to 84 months at 8.53%, and it drops to $793. The buyer “saves” $688 per month today, but in reality, they pay $16,612 in total interest over the life of the loan, compared to just $3,316 for the shorter term.

The system, for better or worse, still works. Cars are still selling, and the numbers still add up on paper. But they only add up because the definition of affordability has been stretched to make them work. The industry will sell this as normal. For the normies making the payments, it should not feel that way.

Top graphic images: DepositPhotos.com; New York Automotive Forum