A decline in budget models has forced some buyers to turn to used cars or hold onto their older vehicles longer, with the average age of cars on the road now topping a dozen years, according to researcher S&P Global. A rising number of Americans are trading in vehicles worth less than what they owe, the latest sign of stress in the automotive industry. Most Read from Bloomberg Just over 28% of trade-ins toward new-car purchases carried negative equity, the highest level since the first quarter of 2021, a ...

More Americans are trading in underwater vehicles. That does not mean the vehicles are submerged. In a sense, the drivers are. More than one in four trade-ins had negative equity in the third quarter of 2025, Edmunds reports. In auto industry parlance, the loans were underwater. Of all used vehicles traded in toward a new car purchase between July and September, 28.1% had negative equity. That means the vehicles were worth less than the owner owed on a car loan. The figure marks a four-year high. Amer ...

Core Insights - A significant number of car owners are currently underwater on their auto loans, meaning they owe more than their vehicles are worth [1][2] - The percentage of underwater trade-ins for new vehicles has reached 26.6% in Q2 2025, an increase from 26.1% in Q1 2025 and 23.9% in Q2 2024, marking the highest level since Q1 2021 [1] - The average amount owed by Americans with upside-down car loans has risen to $6,754 in Q2 2025, up from $6,255 in the same period last year, although it is slightly lower than the $6,880 recorded in Q1 2025 [2] Industry Trends - Affordability pressures are increasing due to elevated vehicle prices and higher interest rates, exacerbating the negative impact of early trade-ins or rolling debt into new loans [2][3] - The introduction of a tax deduction for vehicle loan interest, applicable to new vehicles assembled in the U.S., may not significantly alleviate the financial burden caused by higher interest rates [4]