- Almost 25% of new vehicle trade-ins are underwater.
- People with upside-down car loans owe more money than ever before.
- One in four Americans with upside-down car loans owe more than $10,000.
The Average Amount Owed on Upside-Down Car Loans Is Higher Than Ever
Nearly 25% of trade-ins toward new car purchases have more than $10,000 in negative equity
Between October and December 2024, the amount of money Americans owe on upside-down car loans reached an all-time high. Not only are one in four customers underwater on their car-loans, according to Edmunds' new car trade-in data, but 24.6% of people who have negative equity on their loans owe more than $10,000.
Compared to the same timeframe in 2023, the situation is much more dire. In 2024, 24.9% of trade-ins toward new car purchases had negative equity, while in 2023, that number was 20.4%. The 24.6% of people who owe more than $10,000 on their old car loans is a 2.4 percentage point increase compared to the same period in 2023.
According to Jessica Caldwell, Edmunds' head of insights, "Negative equity isn’t a brand-new phenomenon in the auto lending space — in fact, it wasn’t too long ago when more than a third of trade-ins toward new-car purchases were upside down. What’s particularly alarming in the Q4 figures is that a growing share of trade-ins are hitting the double-digit mark in thousands of dollars owed, making the cycle far more challenging for consumers to escape."
In the October to December 2024 timeframe, on average, buyers who were upside down on their trade-in car loans took on an additional $159 in monthly payments and $12,388 more than the total amount financed than the industry average for all new vehicle loans. These are all-time records across the board.
Edmunds Q4 Negative Equity Data
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Year | Share of new vehicles purchased with a trade-in | Share of trade-ins with negative equity | Average amount of negative equity | Average trade-in age (years) |
2024 | 43.6% | 24.9% | -$6,838 | 3.3 |
2023 | 44.7% | 20.4% | -$6,054 | 3.0 |
2022 | 43.9% | 17.7% | -$5,353 | 2.8 |
2021 | 49.0% | 14.9% | -$4,147 | 2.7 |
2020 | 48.3% | 31.4% | -$5,063 | 3.2 |
2019 | 44.4% | 32.7% | -$5,658 | 3.3 |
“The ramifications for trading in a vehicle well below sea level for a brand-new vehicle can be drastic and lead to a cycle of poor auto financing decisions,” said Edmunds’ director of insights, Ivan Drury. “If you find yourself significantly underwater on your loan, your best opportunity to rise to the surface is to hold onto the vehicle while keeping up with payments and maintenance.”
Photo by Krisanapong Detraphiphat / Getty Images