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Analysts say nearly 1 in 4 vehicle trade-ins toward new-car purchases with negative equity are underwater by $10,000 or more

SANTA MONICA, CA — January 16, 2025 — A growing share of Americans with auto loans owe more than their cars are worth, according to the car shopping experts at Edmunds. Q4 2024 data from Edmunds1 reveals:

• 1 in 4 new vehicle trade-ins are underwater. 24.9% of trade-ins toward new-car purchases had negative equity, up from 24.2% in Q3 2024 and 20.4% in Q4 2023.
• Americans with upside-down car loans owe more money than ever before. The average amount owed on upside-down loans climbed to an all-time high of $6,838, surpassing Q3 2024's record of $6,458. In Q4 2023, the average amount owed on upside-down loans was $6,054.
• 1 in 4 consumers with negative equity owe more than $10,000 on their auto loans. 24.6% of vehicle owners with negative equity who purchased a new-car replacement owed $10,000+ on their car loans in Q4 2024, an increase from 22.2% in Q3 2024. 8.5% of vehicle owners with negative equity owed $15,000+ in Q4 2024, an increase from 7.5% in Q3 2024.

"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," said Jessica Caldwell, Edmunds' head of insights. "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."

To illustrate the repercussions of rolling an upside-down auto loan into a new purchase, Edmunds experts calculated the differences in cost between consumers who financed a new vehicle involving a trade-in with negative equity in Q4 and the industry average for all financed new vehicles. On average, buyers whose trade-ins had negative equity took on an additional $159 in monthly payments and $12,388 more in total amount financed than the industry average for all financed new vehicles. Both of those figures represent all-time records.

Edmunds experts advise that consumers who have an existing loan and are considering a new vehicle purchase take a close look at the value of their current vehicle and compare it against their payoff amount (found on their most recent loan statement) to determine if they are underwater.

"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 Ivan Drury, Edmunds' director of insights. "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."

Shoppers interested in determining the value of their current vehicle can use an Edmunds appraisal tool like the one on Edmunds. Consumers can also track their vehicle's historic value over time on Edmunds here.

Edmunds Q4 Negative Equity Data

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