Nearly 30% of Drivers Owe More Than Their Car Is Worth
In Q2 2026, nearly one-third (29.6%) of drivers trading in their vehicles found themselves with negative equity — meaning they owed more on the loan than what the car was worth at trade-in. This marks a record for any second-quarter period and is driven by high prices paid during supply chain disruptions post-2020, large down payments rolled into new loans, and extended financing terms. The average amount of negative equity reached $6,884 in Q2 2026 — up from the previous year but slightly lower than the first quarter. The average age for underwater trade-ins also hit a record at four years. Edmunds' Ivan Drury noted that many borrowers are now dealing with the financial consequences of high loan amounts and unfavorable terms. Among models, drivers trading in Toyota Tundas faced an average negative equity of $8,929 — one of the highest figures reported for specific vehicles.
Topics: automotive industry car loans consumer debt negative equity