A new report shows the number of Americans finding themselves upside down on their car loans is increasing.
Edmunds’ third-quarter report showed that 28.1 percent of trade-ins on new car purchases had negative equity, a growth of nearly 4 percent since the start of the year. That was the highest percentage in the report since the start of 2021 at 31.9 percent.
The average amount of negative equity was $6,905.
“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 said in the report. “Nearly one in three upside-down car owners owes between $5,000 and $10,000 — and a growing share owes 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.”
The Edmunds report comes after a recent FitchRatings update showing the percentage of auto loans with more than 60 days delinquency at 6.43 percent among subprime borrowers at the end of August.
