COLUMBUS, Ohio — Trading in your vehicle for that new car smell? You might want to park that thought.
New data from Edmunds shows more Americans are underwater on their car loans — and it's not just for luxury vehicles; it’s across the board.
“About half of all transactions involve a trade. But the scary part is nearly a quarter of those transactions, they then involve negative equity,” said Ivan Drury, the director of insights at Edmunds.
Drury explained that with the changes in the market, trade-in values are decreasing.
“If you haven't paid off your loan and you start looking at what is your vehicle worth, and you've only made like, three years of payments, odds are with today's market going back to normal, used values going down, new cars having incentives. It's making it so that your used vehicle's trade-in value has gone down," he said.
Edmunds reports that 24.2% of trade-ins have negative equity, still up nearly 6% from this time last year. The average owed is at an all-time high, sitting at around $6,400.
One in five Americans have debts of about $10,000.
“If you owe like $10,000, you got to buy something. It's like 60k or 70k for a bank to even allow you to roll over that debt,” said Drury.
There are ways to enhance the value of your car. Drury suggests keeping up with routine maintenance, car washes to preserve the paint and prevent rust and to keep the mileage down.
“Is it a $6,500 problem or is this something where you're like, look, I can just drive this car another year, another two years. You know, let my payments catch up with my vehicle's value. And that is absolutely the best way to get ahead of that,” said Drury.