3 Forces Driving Used Car Prices Higher, and Why They're No Longer the 'Affordable' Option
If you’ve been thinking about buying a used car, you may not save as much as you think. Used car prices have increasingly gone up for the past three years. Dealers listed the average used car for $26,342 in April 2026, 3% higher compared to the same time last year, according to data from Kelley Blue Book.
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Here’s why the used car market is no longer an affordable option for budget-conscious drivers and how to shop smarter.
Strong Demand and Limited Supply
With the cost of almost everything going up, anyone shopping for a new car may end up rethinking their options. For this reason, used cars may be a viable option for many people. And when demand is higher than supply, dealers usually end up raising prices.
Cost of Borrowing
If you’re not buying a car in cash, you’re probably going to finance it. In the first quarter of 2026, the average used car payment was $531 per month, with borrowers financing an average of $27,070, according to Experian.
The elevated interest rates make the cost of borrowing high. Plus, financing a used car is more expensive than a new one. Prime borrowers pay around 9% APR on used vehicles, and subprime borrowers pay more than 19%. However, APRs may vary significantly based on credit score.
High Delinquency Rates
Many car borrowers are falling behind on payments, especially for those with low credit. Fitch Ratings data showed that the share of borrowers 60 or more days late on subprime auto loans has hit an all-time high for the third straight month, the highest level in 32 years.
As CarEdge CEO Zach Shefska put it, "Consumers are struggling under rising vehicle prices, extended loan terms, elevated interest rates and shrinking affordability."
Bottom Line: What Buyers Can Do
According to Shefska, if you can only afford a car with a long loan at a high interest rate, you can’t afford that car. Keep loans 60 months or less, even if it means a cheaper car.
Before going to the dealership, get preapproved by a bank or credit union so you can compare it to dealer financing. Kelley Blue Book recommended targeting high-volume mainstream brands, with the top five used sellers — led by Toyota, Honda, Ford, Chevrolet and Nissan — averaging about $25,000, or about 7% below the overall average listing price.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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