A new federal deduction allows you to deduct up to $10,000 in interest on loans for new vehicles assembled in the U.S. for tax years 2025–2028. When to Consider Other Options
To stay financially healthy, put at least 20% down , finance for no more than 4 years , and keep total monthly costs under 10% of your gross income. should you buy a new car
In 2026, new car loans average around 7% APR , while used car rates sit much higher at roughly 12% . Well-qualified buyers can even find 0% APR offers from some automakers to move stagnant inventory. A new federal deduction allows you to deduct
New cars can lose 20–30% of their value in the first two to three years. If you plan to sell within five years, buying a 3–5 year-old used car—which has already absorbed this hit—might be better. In 2026, new car loans average around 7%
Never negotiate based on monthly payments. Focus strictly on the total price including taxes and fees to avoid hidden dealership markups.