About 1 in 3 American drivers who financed their vehicle now owe more on their loans than their cars are worth, a rate that is continuing to grow as car prices increase and long-loan terms become more typical, a new survey report found. The report from car-buying company CarEdge showed 31% of financing car owners are 'underwater,' meaning they have negative equity on their car loans. The company's report shows 17% of its survey respondents believed their vehicle was worth at least $5,000 more than its actual trade-in value.
This 'disconnect,' CarEdge says, can 'lead to unpleasant surprises' when a car owner tries to sell their car, often creating a new underwater cycle when the negative equity is rolled into their next car loan. This creates issues for not only the drivers but the auto industry, particularly for those in the EV or luxury space. We have summarized this news so that you can read it quickly.
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