Here's how much Americans expect to pay for a used car, and how much it will actually cost
FILE-A view of a used car dealership in New York. (Photo by Pablo Monsalve/VIEWpress via Getty Images)
Consumers typically have a budget in mind when shopping for a car, but a recent survey finds what they expect to spend on a vehicle is much different from how much they are likely to pay at the dealership.
In a survey by Edmunds, a majority of respondents said they are holding off on purchasing a new car, with over 73% saying that they have done so because of the inflated costs of cars, while more than 62% said it is due to high interest rates.
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The automotive information and inventory company polled what new and used-car shoppers are saying about what they are searching for in their next car and how it compares to consumers who are buying one despite the costs.
Approximately 48% of new-car shoppers say they would like to spend $35,000 or less on their next car, compared to 14% who would prefer to spend $20,000 or less for their next vehicle.
But 64% of prospective used-car buyers tell Edmunds they would like to spend less than $20,000 on their next vehicle, 50% said they want to spend $15,000 or less, and 27% said they would like to spend $10,000 or less on their next car.
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The average transaction price of a new car was $47,716 in July 2024 and there were very few vehicle purchases under $20,000. Meanwhile, in July 2024, only 5% of all used vehicle transactions were $10,000 or less. The average transaction price for all used vehicles sold in July was $26,936, per Edmunds.
When consumers were asked what they consider a suitable interest rate for a car 75% of respondents admitted that the highest acceptable interest rate for a new car purchase is between 0.1% and 6%, while another 76% said the highest interest rate that they would be willing to accept for a used vehicle purchase was between 0 and 4.99%.
While purchasing a car is a big investment, consumers polled said they are planning to make sacrifices to get their next car.
Over half of respondents noted they are planning to delay paying other expenses to afford a car. Twenty-nine percent said they would give up a vacation, 15% would not pay for basic monthly needs, and 5% would forgo paying for medical procedures.
Separately, more than half of respondents (54%) said they were planning to work longer hours or take a second job to afford their next car.
Edmunds’ data for this report is based on a consumer sentiment survey from August 2024 among car shoppers who have purchased a vehicle previously and have indicated they are planning to purchase a vehicle in the next 12 months.