A growing number of consumers are trading in cars and trucks that are worth much less than the amount of money they still owe on their autoloans — and what they owe is shattering records.
Get a new car or truck when you owe nearly $7,000 more than the old one is worth? And it’s only worse if you’re trying to trade in an electric vehicle.
Being upside down, if you will, leaves consumers with far less money to put toward a down payment and puts them at risk of taking on too much debt to finance the next car.
You’re not alone if your car loan is underwater
One in 4 trade-ins associated with a new car or truck purchase in the fourth quarter last year was “underwater” or “upside down,” according to research from Edmunds.
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The data indicated that 24.9% of trade-ins toward new-car purchases had negative equity at the end of last year, up from 20.4% in the fourth quarter of 2023.
It’s not an outlandish number of consumers. In the fourth quarter of 2019, the share of trade-ins with negative equity was 32.7%.
Amount owed on upside-down car loans hits record
The real shocker is that consumers with upside-down car loans owe more money than ever before.
On average, consumers owed $6,838 on upside-down auto loans, which is an all-time high. Worse yet, some 1 in 4 consumers with negative equity owe more than $10,000 on their loans when they’re trading in their car or truck for a new set of wheels.
And 8.5% of vehicle owners with…
