Used Car Prices Rise: Cox Predicts 2026 Increase
- The US auto market is poised for potential growth in 2026, driven by decreasing auto loan rates and anticipated tax refund increases, though used vehicle sales are projected...
- Auto loan rates have reached a one-year low, creating more favorable financing conditions for consumers.
- Detail: The Federal Reserve began pausing interest rate hikes in late 2023 and has signaled potential rate cuts in 2026, contingent on economic conditions.
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The US auto market is poised for potential growth in 2026, driven by decreasing auto loan rates and anticipated tax refund increases, though used vehicle sales are projected to experience a slight decline.
Federal Reserve Interest Rate Policy and Auto Loan Rates
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Auto loan rates have reached a one-year low, creating more favorable financing conditions for consumers. As of December 2025, the average interest rate for a new car loan was 6.85% and 10.36% for a used car loan, according to Bankrate. These rates are influenced by the Federal Open Market Committee (FOMC)‘s monetary policy decisions.
Detail: The Federal Reserve began pausing interest rate hikes in late 2023 and has signaled potential rate cuts in 2026, contingent on economic conditions. Lower interest rates directly translate to reduced monthly payments for auto loans, increasing affordability for potential buyers.
Example: A $30,000 auto loan at 6.85% over 60 months has a monthly payment of approximately $566, while the same loan at 8% would result in a monthly payment of around $583.
internal Revenue Service (IRS) Tax Refunds and Consumer Spending
Increased tax refunds are expected to boost consumer spending, including purchases in the auto market. The IRS estimates that the average tax refund for the 2026 filing season will be approximately $3,000,a slight increase from the $2,950 average in 2025. IRS Newsroom
Detail: Tax refunds provide consumers with disposable income that can be allocated to large purchases like vehicles. The timing of these refunds, typically beginning in February, coincides with a period of traditionally slower auto sales, perhaps providing a needed stimulus.
Example: A consumer receiving a $3,000 tax refund could use a portion of it as a down payment on a vehicle, reducing the overall loan amount and monthly payments.
Cox Automotive Used Vehicle Sales Forecast
Despite positive economic indicators, Cox Automotive forecasts a 0.9% decrease in used vehicle sales for 2026, totaling 38.3 million units. Retail sales are projected to decline by 0.7% to 20.3 million units. Manheim Insights
Detail: Several factors contribute to this projected decline,including continued inventory constraints,the increasing popularity of electric vehicles (EVs) which impacts the used market,and the age of the existing vehicle fleet. The average age of vehicles on the road is currently 12.5 years, according to Insurance Institute for Highway Safety (IIHS), suggesting a potential increase in scrappage rates.
Example: While overall sales are expected to decrease slightly,certain segments of the used vehicle market,such as fuel-efficient vehicles and those with advanced safety features,may experience stronger demand.
AutoData Corporation New Vehicle Sales outlook
While the provided text focuses on used vehicles, new vehicle sales are also a key indicator of the overall auto market health. AutoData Corporation projects new vehicle sales to reach 16.1 million units in 2026, a 3.5% increase from 2025.autodata Forecasts
Detail: the increase in new vehicle sales is attributed to improved supply chain conditions and