"Edmunds reported that, in Q2 of 2024, the average EV buyer was over $10,000 underwater on their loan, thanks to cratering values. Edmunds reported in January that 29.3% of buyers trading in a car towards a new vehicle in the fourth quarter of 2025 had negative equity. The average buyer with negative equity owed $7,214 more than their car was worth, an all-time high."
"A customer had a mildly used Silverado, wanted a new one, and took almost no convincing. We got all the way to finance, and I could feel the hope bubbling. Then the finance manager walked out. Unfortunately, he said, we weren't going to make this work. The guy owed $40,000 on a truck that was worth around $25,000, had a 430 credit score, and no cash to throw on the pile."
"In an interview with Automotive News, California New Car Dealers Association President Brian Mass said the problem was becoming unmanageable. It's pretty hard to put a deal together if they're coming with several thousand dollars that they owe on their current vehicle, he said."
Negative equity in the automotive industry has reached unprecedented levels, with 29.3% of trade-in buyers owing an average of $7,214 more than their vehicles are worth in Q4 2025. This crisis stems from multiple factors: consumers purchasing larger, feature-rich vehicles beyond their financial means, dealer practices that facilitate these transactions, and rapidly depreciating vehicle values, particularly among electric vehicles. The situation has become so severe that even dealers acknowledge difficulty structuring deals with heavily underwater trade-ins. A personal account illustrates the predatory nature of the industry, where a customer with a 430 credit score and $15,000 negative equity attempted to purchase a new truck, highlighting how the system perpetuates financial hardship for vulnerable buyers.
Read at insideevs.com
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