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The growing number of consumers is trading in cars and trucks, which is much lower than their money. Obligated to their auto Loan – And the one who owes them is scattered.
Get a new car or truck when you owe about $ 7,000 more than the old price? And this is worse when you’re trying to trade in someone Electric vehicle.
Being upside down, if you want, leave the consumers with a low amount so that the payment can be paid and they are at risk of borrowing too much to finance the next car.
If your car debt is underwater you are not lonely
According to Edmunds research, in the fourth quarter last year, the 4 trades associated with the purchase of a new car or truck were “underwater” or “downside”.
The data indicates that the new car purchases at the end of last year have a negative equity in 24.9 % trade ines, which was 20.4 % in the fourth quarter of 2023.
This is not a foreign number of consumers. In the fourth quarter of 2019, the trade with negative equity was 32.7 %.
Ulta Daper Carry Loans Out of Records Removed from Records
The real shock is that the users of the uprising loan loan are owed more money than ever before.
On average, on the auto loan on top of consumers, there were 6,838 obligations, which is always high. The worse thing is, 1 out of 4 of the negative equity of 4 consumers owed more than $ 10,000 while they are trading in their car or truck for a new wheel set.
And 8.5 % of the negative equity vehicles were owned by 000 15,000 or more in the fourth quarter last year.
Don’t make a mistake, in these situations many people are trading in a lot of new cars according to some standards.
The average age is 3.3 years for trade when consumers turn upside down on their car loan. In the past five years, though, it has usually been the case that negative equity conditions include trade in a car that is slightly less or less than 3 years.
Why are borrowers running away in trouble?
According to Ivan Director, Director of Edmunds, Director of Institutes, many consumers are usually filled with interest paid on car loan, meaning that your monthly payment is most interested in car loan’s first few years. Is
In these early years, your monthly car is not paying as much as you can imagine when it comes to reducing the principal balance of the loan.
“Unless it is 0 %, most interest is being paid,” Dori said.
Early payment is not helping you make more equity in the car.
For a few years, especially in 2021 and 2022, Dori said, the shortage of used car, surprisingly pursued high level values, and saved consumers from negative equity conditions.
“Re -sale values ​​on used cars were so high that you could not do anything wrong,” Dori said. “You can drive a car for a year, run back to the dealership and they can pay you the same amount you paid.”
After epidemic diseases, the barriers to the supply chain limit the manufacture of new cars and send new car prices to scirletting. As a result, consumers Also paid for amazing prices for used cars.
And it was amazing how much business could consumers get if they were trying to take off a car.
Not so much anymore.
Here are some things going on: First, many consumers had to pay even more money when they pay a higher price to buy a new car. Many users Sticker paid above the price In 2022, some trucks and cars are taken back.
Second, used car values ​​are trending again. New cars have been sitting for a long time, giving concessions to new cars and pushing prices on older cars. Some do not expect the values ​​of the car used in 2025, which takes more and more people into a negative situation of equity.
Used car and truck prices declined 3.3 % Recent consumers released by the US Bureau of Labor Statistics, based on the price index, up to 12 months by December. New cars prices declined by 0.4 %.
By December 12 months, consumers’ price index increased by 2.9 %.
Thirdly, consumers didn’t have much breathing room because many people did not spend much money on buying a new car or truck in 2021 or 2022. And, Dori said, users took long terms of car loan where you often do not do so. T Pay your principal quickly.
“You’re not giving yourself a breathing room,” Dori said.
Sometimes, he said, drivers may need to trade in their car so they can buy more car or truck than their plans.
Maybe, they initially bought a used car they didn’t really want, but this was available on the dealer’s lot during the epidemic.
“There is a lot of regret for the purchase of epidemic diseases,” said Dori.
Or maybe, their lifestyle changed. Maybe, they bought a small car but got married soon, had twins and now they need SUV or minon.
If you trade in a new car after two or three years, he said, you are more likely to eliminate the maximum negative equity.
EV in high risk of living underwater
How do you know if you are underwater?
Finding Payment Loan money You can review your recent auto loan statement and take a strong look at the current cost of your car on various websites, including Edmunds.
Too much your Mac and Model, the popularity of your car, how many miles you have, and more will depend on.
If someone was upside down on a loan for 2021 Toyota Camera, the average negative equity in the fourth quarter of 2024 was $ 7,236.
The Toyota Camera is a car that usually has a good sales price, which may have cheated some buyers that when they buy a car, they are forced to pay too much money. Some buyers also paid premium prices for the car in 2021. Toyota has also been a camera 2025 models re -designed for years All a hybrid lineup.
Anyone who is upside down on a car loan on the 2022 Land Rover Range Rover will look for an average of $ 10,900 in negative equity.
At the end of the last year, an average of $ 10,446 was overturned at the 2021 Vox Wagon ID4 in a negative situation in the Equity.
Electric vehicles owners may be more at risk of living underwater than in internal combustion engine owners.
The average amount of money owed to all EVs with negative equity was traded to buy a new vehicle in the fourth quarter of 2024. It is in the fourth quarter of 2022, with a negative equity of 7,116.
In general, electric vehicles are very new and lend themselves more depressed, and they do not have good residual values, Dareore said.
“If anyone has recently purchased the EV,” Dreer said, “I hope they like it or they will lease it.”
Researchers in Edmunds say that a problem, this group of EV owners, traded their cars with gas -fired cars and truck owners soon. The average trade for EV, which was under water, was 1.8 years, for example, in the fourth quarter in 2024, compared to 3.3 years of petrol -powered vehicles.
For most parts, after pandemic diseases, he can trade in a car near him at a nearby price for which he has paid it.
Don’t make a mistake, Gap Insurance does not help you in negative equity when you trade in an old car. Gap Insurance – short for short The protection of assets is guaranteed – Car lone covers the difference between the amount of money and the cost of a car manufactured by the insurance company when your car is stolen or overall after an accident.
Paying extra money to buy gap insurance, which is an ed on product, is a strategy to meet these losses stolen or car -related, if your loan balance exceeds the value of a car – Trade in your car.
Where to get information about your car value
Users can track the historical value of their car or truck over time on Edmunds edmunds.com/Appraisal/history Plug in some information in a tool called “Trade in History”.
Many times, a new car who wants a new car can be better than leasing, because if they borrow a car to buy, they can be permanently eliminated underwater.
When you provide financial support to buy a new car to deal with negative equity on the old, only your loan costs and your monthly payment increase. In some cases, some consumers will add money to the old debt to the new car loan.
When they have more than the old car price, however, many consumers may need to reduce additional cash for payment through the bank.
On average, Edmunds noted, buyers whose trade -ines made negative equity in the fourth quarter last year, an additional $ 159 in monthly payments and for all financial -driven new vehicles in the financial year 12,388 received more money. Both of these figures represent always the record.
“For a new vehicle, the utility for trading in a car below sea level can be tightened, and poor auto -financing decisions may take a cycle,” said Darry.
Someone who is significantly underwater will potentially be better than trying to hold the vehicle for a few years while maintaining payments and maintenance.
You do not want to be so underwater on a car loan that you get in debt.
Contact Personal Treasury Columnist Susan Tompur: stompor@freepress.com. Follow himr X @tompor.
