Best New Car Incentives, Lease Deals for May 2026

Those looking to buy or lease a new car this May have some genuine opportunities, especially around the Memorial Day holiday - despite tariff-driven price increases. With over 300,000 leftover 2025 models still sitting on dealer lots, manufacturers are offering aggressive incentives including 0% financing deals and substantial cash rebates to move inventory... READ MORE ⌄

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May 2026 Incentives Updates & Changes

Tariffs are now actively impacting new car prices. We're seeing 2026 models come in about $2,000 higher on average compared to last year's typical $400 model-year increase. Luxury imports are hit hardest, but even domestically-assembled vehicles are affected since no U.S.-made car uses 100% domestic parts. Expect price increases of 1-3% across the board.

The good news for used car shoppers: supply is finally improving. After years of thin off-lease inventory due to COVID-era production shortages, roughly 400,000 additional late-model used vehicles are expected to enter the market this year. Prices are expected to stay relatively stable with only modest increases. Sedans and luxury cars have actually seen price drops, and used EVs coming off lease could be particularly good values.

If you're looking to buy or lease a new car, timing it towards the end of the month is still smart as dealers push to meet sales goals. If you're interested in an electric car, be aware that the $7,500 federal tax credit ended in September 2025. However, many manufacturers are compensating with aggressive discounts and 0% financing to keep EV sales moving. Some state incentives remain available - California offers up to $4,000 for used EVs, and several other states have their own rebate programs worth checking.

The days of paying MSRP or higher are largely behind us for most models. With inventory levels normalized and over 850,000 unsold 2025 models on lots, manufacturers are offering substantial incentives including 0% financing and cash rebates of $3,000 to $10,000 on select vehicles. Remember, getting a great deal foremost depends on the model, which is why you should really consider more than one vehicle when shopping for a deal. By getting bids from multiple dealers, you increase your chance of finding a dealer that is willing to negotiate.

Affordability remains the biggest challenge for car buyers. The average new car payment is now $722/month, with average loan terms stretching to nearly 70 months. Lenders continue to be strict with who they loan money to, especially for buyers with credit scores below 690. Cash buyers still have an advantage, but there's some relief on the horizon.

Interest rates have come down slightly, with the average new car loan now around 7% (and 10-11% for used cars). The Fed cut rates to 3.5-3.75% in December and is expected to make additional cuts this year, which should gradually bring auto loan rates down further. In the meantime, many manufacturers are offering 0% financing as a way to move inventory - this is one of the best ways to beat the current rate environment. Loyalty and conquest bonuses remain common, so if you have a lease return coming up or are switching brands, this could put an extra $1,000 to $2,000 in your pocket.

My advice right now: start compiling price bids. With so many leftover 2025 models still available, there are genuine deals to be had. If you have the luxury of waiting, deals should get even better as we move into summer when dealers become desperate to clear remaining 2025 inventory before 2027 models start arriving. Interest rates should also continue trending down as the Fed makes additional cuts. We're in a much better negotiating environment than we've seen in years.

(Note: incentives can vary greatly by region; these figures may not be accurate in your local area. Always verify with your local dealers)