Part 8/11:
Many consumers who purchased vehicles during the peak of market distortions are now stuck with loans exceeding their vehicle’s worth. Nearly 28% of trade-ins are underwater, averaging $6,900, and about 25% of those are owing more than $10,000.
Adding to this turmoil, buyers often financed these inflated prices—sometimes $20,000 over MSRP—which leaves them vulnerable when vehicle values decline. When they attempt to trade in, the negative equity prevents meaningful upgrades and leads to higher default risks, further straining dealers and lenders.