2025 Car Buying Guide

Best New Cars Under $40,000

At $40k, you're in premium territory: well-equipped 3-row SUVs, capable trucks, and increasingly, electric vehicles that qualify for tax credits.

What $40k Unlocks

Avg. Monthly Payment

$620-$710

60 mo @ 7% APR

EV Tax Credit

$7,500

on qualifying models

Full-Size Trucks

Yes

base F-150, Silverado

Top 10 New Cars Under $40,000

This budget opens doors to serious capability: full-size trucks, well-equipped 3-row SUVs, off-road legends, and electric vehicles with real range. Here's the best of each.

#1

Tesla Model 3 Standard

Electric Sedan
✓ Supercharger network✓ Autopilot included✓ Lowest running costs

Efficiency: 138 MPGe

$38,990

Starting MSRP

#2

Hyundai Ioniq 5 SE

Electric SUV
✓ Ultra-fast charging✓ Retro-futuristic design✓ Huge interior

Efficiency: 114 MPGe

$39,950

Starting MSRP

#3

Kia Telluride S

3-Row SUV
✓ Best 3-row value✓ Upgraded features✓ V6 power

Efficiency: 20/26

$38,590

Starting MSRP

#4

Toyota 4Runner SR5

Off-Road SUV
✓ Off-road legend✓ Body-on-frame tough✓ Best resale

Efficiency: 16/19

$39,975

Starting MSRP

#5

Ford F-150 XL

Full-Size Truck
✓ Best-selling truck✓ Massive capability✓ Pro Power Onboard

Efficiency: 20/24

$36,500

Starting MSRP

#6

Chevrolet Equinox EV 2LT

Electric SUV
✓ Affordable EV✓ GM Ultium platform✓ Tax credit eligible

Efficiency: 319 mile range

$39,995

Starting MSRP

#7

Honda Pilot Sport

3-Row SUV
✓ Spacious 3-row✓ Honda reliability✓ AWD standard

Efficiency: 19/27

$39,895

Starting MSRP

#8

Mazda CX-90 Preferred

3-Row SUV
✓ Luxury interior✓ Inline-6 turbo✓ Premium feel

Efficiency: 24/28

$39,950

Starting MSRP

#9

Toyota Tacoma TRD Sport

Midsize Truck
✓ Off-road ready✓ Iconic resale✓ New generation

Efficiency: 19/24

$38,980

Starting MSRP

#10

Subaru Outback Wilderness

Wagon/SUV
✓ True adventure vehicle✓ 9.5" clearance✓ Turbocharged

Efficiency: 22/26

$39,995

Starting MSRP

Best Electric Vehicle: Tesla Model 3

At $38,990, the Model 3 is the benchmark EV. The Supercharger network is unmatched, Autopilot is standard, and running costs are a fraction of gas vehicles. With the $7,500 federal tax credit (if eligible), the effective price drops to ~$31,500.

Best 3-Row SUV: Kia Telluride S

The S trim adds features that should be standard at this price: wireless phone charging, heated seats, upgraded audio, and more. It's essentially a $50k experience for $38,590.

Best Off-Road: Toyota 4Runner

The 4Runner is the last of the true body-on-frame SUVs at this price. It's not fuel-efficient, but nothing else matches its off-road capability and legendary reliability. Plus, resale values are absurdly strong.

EV Tax Credit Breakdown

Many EVs under $40k qualify for the $7,500 federal tax credit, but there are rules:

  • Vehicle must be assembled in North America
  • MSRP must be under $55k for cars, $80k for SUVs/trucks
  • Your income must be under $150k (single) or $300k (joint)
  • Can be taken as point-of-sale discount or tax credit

Full-Size Truck: Ford F-150

The F-150 starts at $36,500, leaving room in your budget for essential upgrades. Add the 2.7L EcoBoost for towing capability and the 360-degree camera for easier maneuvering—still well under $40k.

EV vs. Gas at $40k

FactorEV (Tesla Model 3)Gas (Kia Telluride)
Starting Price$38,990$38,590
After Tax Credit~$31,490$38,590
Annual Fuel Cost~$600~$2,400
5-Year Savings$9,000+—

Best Adventure Vehicle: Subaru Outback Wilderness

The Wilderness trim takes the Outback from capable to serious. With 9.5 inches of ground clearance (more than many Jeeps), skid plates, and a turbo engine, it's ready for fire roads and snow without the fuel penalty of a body-on-frame SUV.

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