SUMMARY: Rising car prices make early shopping and strong financing prep essential, including comparing options, securing preapproval, and understanding full ownership costs.

Shopping for a vehicle has gained new wrinkles as tariffs on cars and parts threaten to push prices higher. So far, automakers have chosen to absorb the higher costs rather than pass them on to shoppers. However, by the end of 2025, prices rose about 1% to 4%, pushing the average new car sticker price past $50,000.

Average new car prices topped $49,000 in August 2025, Kelley Blue Book reported. With that in mind, surpassing $50,000 by 2026 isn’t a major leap. Still, prices are up an average of $10,500 from five years ago — and few expect them to fall anytime soon, if ever.

In short, buying now is likely better than buying later in terms of sticker price. Right now, dealers are clearing out 2025 models to make room for 2026 vehicles, making this an appealing time to shop. But sticker price isn’t the only consideration. More on that shortly.

In addition to timing, the price of your next set of wheels varies by model. Paradoxically, used-vehicle prices are so high that it may be cheaper to buy certain models new. This depends on the model and market, but it’s worth keeping in mind as you compare options.

The most popular new vehicle in 2024, as usual, was the Ford F-150 pickup, according to Edmunds. Other top sellers, in descending order, were the Chevrolet Silverado, Toyota RAV4, Tesla Model Y, Honda CR-V, GMC Sierra, Ram 1500, Toyota Camry and Honda Civic.

Learn auto loan basics

Whether you buy a bestseller or something unique, you’ll likely finance it with an auto loan from your Credit Union or bank. Many car dealers can also arrange financing for you.

When you take out an auto loan, the lender provides a lump sum to purchase the vehicle. You repay that amount, plus interest, with monthly payments over a set period. The vehicle serves as collateral, and the lender holds the title until the loan is paid off.

When assessing a loan, consider these key elements:

•    Annual percentage rate (APR) interest
•    Total finance charge
•    Amount financed
•    Total of monthly payments
•    Total sale price

All of these are negotiable. Loans through dealerships are often more expensive. Key factors affecting cost include the interest rate and loan term. Also check for any prepayment penalties or add-ons, such as credit insurance or extended warranties.

Get preapproved

Before shopping for a car, consider getting preapproved. Preapproval is a lender’s conditional agreement to loan you the money, specifying a maximum loan amount to help you understand what you can afford.
Preapproval offers other benefits as well. It gives you more negotiating power with dealers and helps you better estimate the total cost of your purchase.

Make your list: Leasing vs. buying

If you buy a car, you’ll own it after making all payments, which typically takes three to seven years. You can also lease a car, usually for two to four years. Lease payments generally don’t go toward ownership — when the lease ends, you return the car.

Payments are typically higher when buying, but you’ll own the vehicle once they’re complete. Lease payments are usually lower, but you won’t own the car at the end of the term. You may also face additional fees if you exceed mileage limits, usually between 10,000 and 15,000 miles per year.

When evaluating a lease, consider the vehicle price, down payment, mileage limits and whether there’s a purchase option at the end of the term.

Save for a down payment

The down payment is the initial amount you pay when financing a vehicle. It can be cash or the value of a trade-in. The larger the down payment, the less you’ll need to borrow — and the better the interest rate you may qualify for.
A typical down payment is 20% of the purchase price, including taxes and fees. On an average new car, that’s about $12,500. Some or all of that may come from your trade-in.

If you need to save for a down payment, consider these tips:

•    Set up a dedicated savings account.
•    Arrange automatic monthly transfers into that account.
•    Trim expenses to free up more money to save.
•    Consider ways to increase income, such as a part-time job.

Understand the cost of ownership

Many buyers focus on the monthly payment, but it’s equally important to look at the total cost of ownership. This includes all expenses related to owning the car, such as the purchase price, financing costs, insurance premiums, fuel, maintenance, depreciation and other fees like taxes, registration, tolls and parking.

As you navigate today’s auto market, think of it like a road trip: plan your route, fuel stops, rest breaks and sightseeing opportunities. You’ll learn a lot along the way and end up with a vehicle that fits your needs. And, if you plan carefully, you could save some money, too.