Illustration: Shoshana Gordon/AxiosNew car payment shock is real, but it's not the car — it's the cost of financing that hurts so much. Why it matters: Everyone complains about vehicle affordability, but car prices, adjusted for inflation, haven't changed much in a decade, according to experts at Cox Automotive.Driving the news: Cox's annual midyear automotive review out Wednesday features an interesting perspective on affordability from executive analyst Erin Keating.Her take: car prices aren't as crazy as they seem.Zoom in: Consider the Honda CR-V, one of America's most popular SUVs.The average transaction price for an entry-level CR-V (LX trim) is about $11,000 higher today than it was in 2016, climbing from about $28,000 to roughly $39,000."On paper, that stings," she said.Adjusted for inflation, however, that CR-V should cost about $38,300. Instead, it's $38,778 — a difference of $478."That's basically a rounding error, suggesting the price of the vehicle has remained consistent for 10 years," Keating said. The intrigue: Even with the modest uptick, car buyers are getting far more value in today's high-tech vehicles than they did a decade ago.The 2026 version of the CR-V is far better equipped than 2016's LX. It now comes with standard equipment and features that weren't available then — a more powerful turbocharged engine, a nine-inch touchscreen, wireless Apple CarPlay, push-button start and a full suite of safety technologies.The big picture: Features that were high-priced options a decade ago — automatic emergency braking, lane departure warning and rear cross traffic alert, for example — now come standard even on base models because consumers reward brands with high safety ratings. Consumers also expect conveniences like CarPlay, built-in WiFi and remote start to be included for free. And most say they wouldn't pay extra to get them, according to a Cox survey of car buyers.Reality check: Hardly anybody buys base models. Instead, more than 80% trade up to more expensive trim levels to get even more premium features, which means they're paying roughly $7,200 more than the advertised starting price, or MSRP, Cox found. It's not a trick, said Keating. "The base models exist. Manufacturers build them and put them on the lot. Consumers just don't choose them."One example: The Toyota RAV4 starts around $32,000, but the average transaction price is closer to $41,000 because buyers gravitate to the XSE and Limited hybrids.The real culprit behind higher car payments is the cost of borrowing, said Keating. Auto loan interest rates increased from 6.5% to 9.5% over the past decade, driving up monthly payments by $282, to an average $753.And that doesn't include the cost of insurance, maintenance or gasoline — all of which are driving up the cost of car ownership. The bottom line: Car payments are higher, but "the vehicle isn't the villain," said Keating. "It's a symptom of the broader cost-of-living squeeze."Cox Automotive is owned by Cox Enterprises, Axios' parent company.
Car buyers pay more, get more for their money
New car payment shock is real, but it's not the car — it's the cost of financing that hurts so much.







