2026 will be the year of the used car
As 2025 draws to a close, we can look back at a year of turmoil in the automotive marketplace. Sales surged ahead of tariff deadlines. Electric vehicle sales peaked before federal rebates ended. The average sale price for a new car crested above $50,000 for the first time. I predict 2026 will be the year of the used car. Here’s why.
New car prices are too high
Sticker shock is hitting car shoppers. For example, a 2025 Ford F-150 pickup truck, one of the bestselling vehicles in the U.S. for the past 40 years, has a starting price of $41,405 (including the destination fee) in the base XL trim with a regular cab, 6.5-foot bed, a 5.0-liter V-8 and rear-wheel drive.
But that’s not the configuration most buyers want. Pickup trucks now double as family haulers and lifestyle accessories. Stepping up to a lower-mid-trim XLT model with a SuperCrew cab, 5.5-foot bed, V-8 engine, and 4x4 capability starts at $56,850. If you covet one of Ford’s loaded Platinum models, get ready to fork over $75,000 or more.
Destination fees have risen
Vehicle prices are up, and so are the fees. According to Consumer Reports, the destination fee, a mandatory charge on every new car delivered in the continental U.S., was $1,695 for a 2021 F-150. Right now, the fee is $2,595. And unlike the sticker price, that fee is effectively a non-negotiable figure at the dealership. Not to pick on Ford: Destination fees have risen at most, if not all, auto manufacturers. Is this an issue of the increased cost of shipping vehicles, or is it a way to camouflage price increases? It doesn’t really matter — the destination fee is a given for new car sales at dealerships.
Federal tax credits for EVs have ended
Until Sept. 30, 2025, many buyers could qualify for a federal tax credit up to $7,500 for a new electric vehicle purchase or lease and up to $4,000 for a previously owned EV. That program is over. You can still buy a new or used EV, but you won’t get the federal price break anymore. Operating and maintaining an EV remains cheaper than fueling and regular service on a conventional gas-powered vehicle. Still, the economic playing field is more level than it was before the start of October.
Interest rates are high, and incentives are low
According to Experian, average car loan interest rates in December 2025 range from 5.27% for excellent “super prime” (credit scores above 781) to 15.97% for poor “deep subprime” (credit scores below 500). While today’s rates have moderated from their peak in June 2024, they remain high compared to the past decade. Higher interest rates tend to suppress new car sales, especially for consumers with average to poor credit.
Incentives are the lifeblood of new-car sales promotions. They include cash rebates, low-interest financing and lease deals, along with non-cash perks such as extended warranties and service benefits. While some incentives have returned to the new car market, they lag what we saw a few years ago.
What does this mean for used cars?
In general, used cars cost less than new cars, which makes sense. They’re used.
However, “used” doesn’t mean “used up.” Authorized dealers frequently offer certified “previously owned” inventory that has been inspected, serviced and reconditioned to like-new condition, carrying a warranty backed by the manufacturer. Those pre-owned cars often come with low mileage and are in excellent condition.
Buyers can save substantial amounts by choosing a certified pre-owned vehicle from a franchised dealer or save even more by seeking out a used car at an independent lot or from a private party.
According to Kelley Blue Book, a 2024 Ford F-150 XLT equipped as described above, with 16,000 miles on the odometer, in “Very Good” condition, is worth approximately $46,000 in a private-party sale. That’s $10,000 less than a brand-new truck, and it will come with the balance of a three-year/36,000-mile bumper-to-bumper warranty and a five-year/60,000-mile powertrain warranty.
Used cars, whether sold by private parties, on independent lots or at dealerships, do not incur shipping fees unless you buy from a remote seller and choose to have the vehicle trucked to your location.
Buying a used car comes with some risk. I always recommend that shoppers obtain an independent vehicle inspection before making a vehicle purchase, and to use trusted methods for payment and title transfer to complete the transaction.
The risk can be worth the reward
So, why is 2026 the year of the used car?
In times of uncertainty, consumers tend to hold onto their cash and secure their assets. People will still need to replace their worn-out or inoperative vehicles or acquire a new one to meet their changing needs. I believe more people will turn to the used market. We’re already seeing a downturn in new car sales as 2025 draws to a close. Affordability is the watchword in the economy, and previously owned cars represent the best bang for the buck on the automotive market.
The rules of supply and demand will play a significant role here, as the supply of late-model used cars is somewhat limited because of lower production of new vehicles during the COVID-19 pandemic. Good used cars will command solid prices, which will tempt sellers to capitalize on the relative scarcity and profit.
It all adds up to opportunity for used car buyers and sellers in 2026 — the year of the used car.
Let’s check back next year to see how this prediction stacked up.
Jason Fogelson is a managing editor for Kelley Blue Book and Autotrader. A veteran automotive journalist, he has written for multiple national outlets through the years.
The Steering Column is a weekly consumer auto column from Cox Automotive. Cox Automotive and The Atlanta Journal-Constitution are owned by parent company, Atlanta-based Cox Enterprises.
