More car buyers are finding themselves in a tough spot financially. According to a recent report from Edmunds, more than 26% of new-vehicle trade-ins in the second quarter of 2025 had negative equity — the highest share in more than four years.

Negative equity refers to a situation in which you owe more on your vehicle than it’s worth, leaving you “upside down” or “underwater” on your loan. Negative equity is an acute problem when you trade that vehicle for another new one because you’ll have to pay off what you owe while simultaneously taking on the new loan payments. The average amount owed on these upside-down loans was $6,754, underscoring the mounting risks of car debt in today’s market.

Recommended Videos

“Consumers being underwater on their car loans isn’t a new trend, but the st

See Full Page