New-vehicle affordability improved in January, according to the latest Cox Automotive/Moody’s Analytics Vehicle Affordability Index, reaching the best level since March 2025 when tariffs were first announced. Lower transaction prices and lower interest rates more than offset reduced incentives.
The estimated average auto loan rate decreased by 2 basis points to 9.52%1, which was lower year over year by 26 basis points. The average new-vehicle price decreased 2.2% for the month to $49,191, according to Kelley Blue Book’s January average transaction price report. Income growth remained strong at 3.7% year over year. Lower prices, lower rates and higher incomes combined to improve vehicle affordability conditions.
The typical payment decreased 1.4% to $756, which was up 1.7% year over year but at the lowest monthly payment since last March. The number of median weeks of income needed to purchase the average new vehicle declined to 35.6 weeks from 36.2 weeks in December. The average monthly payment peaked at $795 in December 2022.
Cox Automotive/Moody’s Analytics Vehicle Affordability Index
January 2026
Weeks of Income Needed to Purchase a New Light Vehicle
New-vehicle affordability in January was better than a year ago, when prices were 1.9% lower but interest rates were higher. Incomes were also lower a year ago. January incentives were 6.4% lower than a year ago, yet affordability still improved – a sign that macro tailwinds from lower rates and higher incomes continue to outweigh reduced manufacturer support. The new-vehicle affordability index fell by 1.8% year over year, indicating affordability improved last month. A year earlier, it required 36.2 weeks of median income to purchase the average new vehicle.
Click here for the full methodology for the Cox Automotive/Moody’s Analytics Vehicle Affordability Index.
The next update of the Cox Automotive/Moody’s Analytics Vehicle Affordability Index will be published on March 16, 2026.
1 The index input of the average interest rate paid by consumers is calculated to reflect a 72-month, fixed-rate loan. For the latest Dealertrack estimated volume-weighted average new loan rate, visit the Auto Market Snapshot.
The Cox Automotive/Moody’s Analytics Vehicle Affordability Index (VAI) is updated monthly using the latest data from government and industry sources, including key pricing data from Kelley Blue Book, a Cox Automotive brand. This important industry measure will be released at mid-month to indicate if the prices paid for new vehicles are moving out of consumers’ financial reach or becoming more affordable over time.
