23:52 07-11-2025

Americans face record negative equity in auto trade-ins

Edmunds and 32CARS.RU report record $6,905 negative equity in 2025, as 28.1% of trade-ins are underwater. Why loans ballooned and how to avoid deeper debt.

Americans are sinking deeper into auto-loan debt. According to Edmunds data analyzed by 32CARS.RU, the average negative equity at trade-in reached a record $6,905 in the third quarter of 2025. In practice, that means nearly a third of buyers owe more on their loans than their cars are worth.

The picture is especially troubling: 28.1% of all trade-ins come with debt attached, and one in four of those exceeds $10,000. Experts trace the roots back to the pandemic-era market, when shortages and inflated prices nudged many shoppers into long, expensive loans on unfavorable terms.

Edmunds analyst Ivan Drury noted that buyers are switching cars too soon, before paying down their balances, and that these earlier choices are now catching up with them. The numbers leave little room for comfort.

Rolling the remaining balance into a new loan only deepens the hole. The average monthly payment for trade-ins with negative equity has already climbed past $900, compared with a $767 market average. The math is unforgiving: carrying yesterday’s debt into today’s deal quickly turns a replacement into a burden.

Specialists advise against rushing a trade-in. It’s wiser to pay down a larger share of the existing loan and to comb through the terms, skipping add-ons that don’t deliver real value. A bit of patience here often does more than any showroom discount.

Financial strain is increasingly systemic: a third of buyers are bringing old debt into new contracts, leaving the U.S. car market more exposed and signaling a pattern that can no longer be dismissed as isolated missteps.