Santa Monica, Calif., July 29, 2025 (GLOBE NEWSWIRE) -- A growing share of car owners are finding themselves underwater on their auto loans, according to new data from the car shopping experts at Edmunds. Q2 2025 data from Edmunds reveals:
- More than one in four new vehicle trade-ins are underwater, a four-year high. 26.6% of trade-ins toward new-car purchases had negative equity, up from 26.1% in Q1 2025 and 23.9% in Q2 2024. This is the highest share Edmunds has on record since Q1 2021, when 31.9% of new-car trade-ins were upside down.
- Many Americans with upside-down car loans are thousands in the red. The average amount owed on upside-down loans was $6,754, down slightly from Q1 2025’s $6,880 but up from Q2 2024’s $6,255.
- A growing share of underwater car owners are dragging major debt into their next vehicle purchase.
- 32.6% of underwater trade-ins had between $5,000 and $10,000 in negative equity, compared to 31.9% in Q1 2025 and 30.2% in Q2 2024.
- 23.4% owed more than $10,000, compared to 24.5% in Q1 2025 and 20.7% in Q2 2024.
- 7.7% owed more than $15,000, compared to 8.4% in Q1 2025 and 6.8% in Q2 2024.
“Consumers being underwater on their car loans isn’t a new trend, but the stakes are higher than ever in today’s financial landscape,” said Ivan Drury, Edmunds’ director of insights. “Affordability pressures, from elevated vehicle prices to higher interest rates, are compounding the negative effects of decisions like trading in too early or rolling debt into a new loan, even if those choices may have felt manageable in years past. And as buyers take on new loans with much higher interest rates than those from just a few years ago, even potential tax deductions can’t meaningfully offset the thousands more they’ll pay in interest. With a growing share of upside-down owners thousands of dollars in the red, many are at risk of getting stuck in a cycle of debt that only grows harder to break over time.”
To highlight the financial impact of rolling negative equity into a new vehicle purchase, Edmunds analysts compared the costs for consumers who financed a new vehicle involving a trade-in with negative equity in Q2 against the industry average for all financed new vehicles. The average monthly payment for buyers who rolled negative equity into a new loan climbed to $915 in Q2 — the highest Edmunds has on record for this group and $159 more than the overall industry average of $756. They also financed $12,145 more than the typical new-vehicle buyer.
For car owners considering purchasing a new vehicle, Edmunds experts recommend they review their loan payoff amount and compare it to their vehicle’s current trade-in value to understand if they’re underwater — a crucial first step in making more informed purchasing and financial decisions.
“If you’re thinking about replacing your vehicle but still have an outstanding loan, it’s important to understand where you stand financially before making your next move,” said Joseph Yoon, Edmunds’ consumer insights analyst. “In many cases, holding onto your current car and staying current on payments and maintenance may be the wisest choice. But if a new vehicle is the right decision for you, doing your research is key. Choosing the right car for your needs and budget can save you more in the long run than any incentive the dealer or manufacturer may be offering. In today’s market, smart shopping is your strongest defense.”
Shoppers can use Edmunds’ free appraisal tool to determine their current vehicle’s value, and track its historic value over time here on Edmunds. For consumers underwater on their car loans, Edmunds offers expert advice on what to do in this guide.
Edmunds Q2 Negative Equity Data
| 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) |
| 2025 | 45.7% | 26.6% | -$6,754 | 3.8 |
| 2024 | 44.8% | 23.9% | -$6,255 | 3.7 |
| 2023 | 46.2% | 17.3% | -$5,543 | 3.4 |
| 2022 | 46.8% | 14.7% | -$4,487 | 3.2 |
| 2021 | 50.8% | 23.1% | -$4,246 | 3.6 |
| 2020 | 45.6% | 37.2% | -$5,845 | 3.9 |
| 2019 | 44.6% | 34.6% | -$5,317 | 3.8 |
About Edmunds
Edmunds guides car shoppers online from research to purchase. With in-depth reviews of every new vehicle, shopping tips from an in-house team of experts, plus a wealth of consumer and automotive market insights, Edmunds helps millions of shoppers each month select, price and buy a car with confidence. Regarded as one of America's best workplaces by Fortune, Great Place to Work and Built In, Edmunds is based in Santa Monica, California. Follow us on TikTok, Twitter, Facebook and Instagram.
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Talia James-Armand Edmunds 310-491-8738 pr@edmunds.com