Underwater and Sinking Deeper: The Average Amount Owed on Upside-Down Auto Loans Climbed to an All-Time High of $6,905, According to Edmunds
Analysts say a record nearly 1 in 4 vehicle trade-ins toward new-car purchases with negative equity carried more than $10,000 in debt
Santa Monica, Calif., Oct. 15, 2025 (GLOBE NEWSWIRE) -- More Americans are finding themselves upside down on their car loans, according to the car shopping experts at Edmunds. Q3 2025 data from Edmunds* shows that a growing share of owners are trading in vehicles worth less than what they owe — and the debt they are rolling forward is only growing:
- More than one in four new vehicle trade-ins are underwater, a four-year high. 28.1% of trade-ins toward new-car purchases had negative equity, up from 26.6% in Q2 2025 and 24.2% in Q1 2025. This is the highest share Edmunds has on record since Q1 2021, when 31.9% of new-car trade-ins were upside down.
- Americans with upside-down car loans owe more than ever. The average amount owed on upside-down loans hit a record $6,905 in Q3, edging past the previous high of $6,880 set in Q1 2025.
- Nearly one in three underwater car owners owe between $5,000 and $10,000 in debt — a new record high. 32.9% of negative-equity trade-ins fell into this range in Q3, up from 32.6% in Q2 and continuing a steady climb since last year.
- A record share of underwater car loans are carrying five-figure debt. Nearly one in four (24.7%) trade-ins with negative equity carried more than $10,000 in debt in Q3, surpassing the previous high of 24.6% set in Q4 2024. Another 8.3% of trade-ins with negative equity carried more than $15,000 in debt, up from 7.7% in Q2 2025.
*Edmunds data for this release focuses specifically on new-vehicle purchases and excludes used.
Analysts warn of long-term consequences
“The sheer amount of debt consumers are carrying in their trade-ins should be a wake-up call,” said Ivan Drury, Edmunds’ director of insights. “Nearly one in three upside-down car owners owe between $5,000 and $10,000 — and a growing share owe far more than that. Much of this stems from shoppers trading out of vehicles too quickly, or carrying loans taken out during the pandemic car market frenzy, when prices were at record highs. Those choices are now catching up, making it far harder to buy again without piling on even more debt.”
Rolling debt drives higher monthly payments
To highlight the financial effect 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 Q3 against the industry average for all financed new vehicles. The average monthly payment for buyers who rolled negative equity into a new loan was $907 in Q3, down slightly from Q2’s high of $915 and $140 more than the overall industry average monthly payment of $767. They also financed $11,164 more than the typical new-vehicle buyer.
Edmunds advice for car owners and shoppers
While Edmunds analysts say the growing amount of negative equity underscores broader affordability challenges, they also note that consumers still have opportunities to make smarter financial moves — especially if they understand where they stand before trading in or taking on new debt.
“For many car owners, there’s no quick fix for being underwater. It’s about minimizing how much deeper you go,” said Joseph Yoon, Edmunds’ consumer insights analyst. “If you can, wait until you’ve paid down more of your balance before trading in. But if you do need to replace your car, make sure your next purchase fits your budget, not just your needs. The right vehicle choice can prevent a short-term decision from becoming a long-term setback.”
Edmunds analysts also advise that before turning in a vehicle, consumers should review their loan paperwork for add-on products like extended warranties, service contracts, or wheel-and-tire protection. Canceling these agreements, even if the refund is prorated, can help chip away at the amount owed on the loan and slightly improve the payoff-to-value balance.
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 Q3 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 | 44.6% | 28.1% | -$6,905 | 3.7 |
| 2024 | 43.2% | 24.2% | -$6,458 | 3.6 |
| 2023 | 44.4% | 18.5% | -$5,808 | 3.2 |
| 2022 | 45.2% | 15.5% | -$4,894 | 2.9 |
| 2021 | 48.6% | 19.4% | -$4,200 | 3.2 |
| 2020 | 48.3% | 31.6% | -$4,964 | 3.5 |
| 2019 | 45.9% | 34.0% | -$5,251 | 3.6 |
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.
###
Attachment
Talia James-Armand Edmunds 310-491-8738 pr@edmunds.com
Legal Disclaimer:
EIN Presswire provides this news content "as is" without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the author above.
