Are You “Upside Down” In Your Car Loan?

How much do you owe for your vehicle? Are you “upside down”, meaning you owe more on the car or truck than it’s worth? If you are, you’re not alone.  

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According to a report that was in the Morning Brew yesterday quoting an article from CNBC, Edmunds, a company that helps consumers research and get details on the car industry, the amount of American car owners owe grew in the third quarter. 

The report says that balance of what is owed versus what the vehicle is worth is on average $6,458. Last year during the same time, the amount was $5,808. 

One of the problems Edmunds points out is that if you don’t pay the vehicle off yourself, the overage amount just keeps getting passed along each time you trade that vehicle in for another one.  

One of the things that has probably led to those figures is the fact that coming out of Covid, prices for cars and trucks went sky high. Someone folks had to trade and carried the negative equity in that trade. 

Other folks didn’t have to trade but wanted to and were willing to take the risk.  

If there is good news coming from this, it appears that prices are slowly coming back down to earth. Part of that reason is that there are more vehicles available now compared to when our lives evolved around covid-19.  

Some reports show new car prices down as much as 3% from what they were in 2022. Pre-Owned vehicles are also not costing as much as they once did.  

So, if you waited to try and find another vehicle, now is at least a better time. Hopefully you were able to get more paid down on what you owe on what you're driving now. And if you traded prior to things improving, sadly, you’ll likely be carrying the negative equity for a while.