Average Amount Owed on Upside-Down Car Loans Hit an All-Time High in Q3 2024

[pizzadude]

A growing number of Americans with auto loans owe more than their cars are currently worth, Q3 2024 data from Edmunds reveals:

• The share of Americans who are upside down on their auto loans is on the rise. 24.2% of trade-ins toward new vehicle purchases had negative equity, up from 23.9% in Q2 2024 and 18.5% in Q3 2023.
• Consumers who are underwater on their car loans owe more money than ever before. The average amount owed on upside-down loans climbed to an all-time high of $6,458, compared to $6,255 in Q2 2024 and $5,808 in Q3 2023.
• More than 1 in 5 consumers with negative equity owe more than $10,000 on their auto loans. 22% of vehicle owners with negative equity owed $10,000+ on their car loans, and 7.5% of vehicle owners with negative equity owed $15,000+.

https://www.edmunds.com/industry/press/negative-equity-on-the-rise-the-average-amount-owed-on-upside...

[cashorcharge]

Sadly, I don't see much of a way out of this....it's doubtful that Used Car values are going to increase dramatically enough to clear out some of the negative equity people have.  Between high rates and dealers charging (and people paying) for more than the car was worth at the time they purchased, there is no easy way...outside of writing a check to clear this out.  

As we continue in 2025, rates are still high and though some of the additional addendums have diminished from dealers lots, the values of those cars won't flip enough to make up for it.  On top of that....(without being political) the potential for Tariffs will only increase the cost of new cars....and alternatively, dealers will increase the list price of their used cars as consumers may switch from new to used

[GZG]

that's terrifying

don't know who to blame, the people buying the cars, or the banks underwriting these loans

[markbeiser]

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@GZG wrote:

that's terrifying

don't know who to blame, the people buying the cars, or the banks underwriting these loans

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Yes.

[markbeiser]

I'm more than happy with my paid for 2017 car, I'm not out to impress anyone.
I drive a small crossover specifically because it blends in with the millions of other cars with the virtually identical shape, and has a lot of utility.
With a leather interior and nice sound system of course.

[NoMoreE46]

Dang- So almost 30% have at least $10,000 of negative equity rolled into their auto loans.

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@pizzadude wrote:

A growing number of Americans with auto loans owe more than their cars are currently worth, Q3 2024 data from Edmunds reveals:

• The share of Americans who are upside down on their auto loans is on the rise. 24.2% of trade-ins toward new vehicle purchases had negative equity, up from 23.9% in Q2 2024 and 18.5% in Q3 2023.
• Consumers who are underwater on their car loans owe more money than ever before. The average amount owed on upside-down loans climbed to an all-time high of $6,458, compared to $6,255 in Q2 2024 and $5,808 in Q3 2023.
• More than 1 in 5 consumers with negative equity owe more than $10,000 on their auto loans. 22% of vehicle owners with negative equity owed $10,000+ on their car loans, and 7.5% of vehicle owners with negative equity owed $15,000+.

https://www.edmunds.com/industry/press/negative-equity-on-the-rise-the-average-amount-owed-on-upside...

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[Realist]

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@markbeiser wrote:

I'm more than happy with my paid for 2017 car, I'm not out to impress anyone.
I drive a small crossover specifically because it blends in with the millions of other cars with the virtually identical shape, and has a lot of utility.
With a leather interior and nice sound system of course.

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Exactly this.

We typically run them as long as possible before it no longer makes sense to keep up with the repair cost.  

We have friends and family that insist that they have to have a new lease every two years (some with up to four in a family), and other family members that insist they have to finance a new vehicle every few years, out of sheer boredom with their current vehicle.    Our neice is one of these statistics in the mentioned article, $750 payment on a newer Ford Raptor, can't sell it for what she needs, but wants to jump into another new vehicle anyways.  Affordability, that's an entirely different topic considering it makes up 25-30% or so of her income, while still living at home.  But, to each their own.  

I am thankful I don't have that particular appetite in life.    Both of those avenues above are fine for personal tastes, but it's a bit expensive and will cost.  If you run a price comparison over 10 years spanning all categories, only one method steps out as the clear winner financially. 

I'm not judging anyone's call and what they should do for themselves, as everyone runs their own race in life.   I'm simply judging what doesn't work for me, and my calculations.

[markbeiser]

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@Realist wrote:

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Our neice is one of these statistics in the mentioned article, $750 payment on a newer Ford Raptor, can't sell it for what she needs, but wants to jump into another new vehicle anyways. 

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I'm guessing she also has $0 in a retirement account?😑

[Realist]

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@markbeiser wrote:

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@Realist wrote:

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Our neice is one of these statistics in the mentioned article, $750 payment on a newer Ford Raptor, can't sell it for what she needs, but wants to jump into another new vehicle anyways. 

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I'm guessing she also has $0 in a retirement account?😑

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Honestly, I never thought about that until you just mentioned it.  But you could be correct - and that's a fair assessment.

My in-laws, they aren't as honed into finances like I am.  This has trickled down to the children and it does reflect.  But, honestly, I didn't even think about the 401k aspect.  

I do know with 100% certainty, the more dominate/assertive parent within the household doesn't believe in 401ks, as they have stated as much.  You very much may be correct.  🤦‍♀️🤦‍♂️

[markbeiser]

@RealistTo be fair, many employer 401Ks are lackluster to put anything into beyond what the employer matches, or after maxing out a Roth IRA.
Any idiot can become a millionaire over the course of their working life just by figuring out how to budget to max their IRA contributions and putting it into index funds, without ever having to research and make smart stock picks, and if they get lucky on some individual stock picks along the way like I did, even an idiot may be able to retire a little early.
For many, it doesn't even take much of a sacrifice, just don't sign up for huge monthly car/insurance payments!