Negative equity on trade-ins stayed near 30% in the third quarter, but the pressure it’s putting on consumers is growing, with higher payments, interest, and more money being rolled into new loans.
Driving the news: Negative equity was rolled into loans on 29% of trade-ins in the third quarter, according to Edmunds.
That’s down 2% from the peak at the end of the first quarter of 2026, but up 1% year over year.
By comparison, the percentage of trade-ins with negative equity peaked at 37% in mid-2020.
Zooming in: While the overall percentage of negative equity remains below levels seen between 2016 and 2020, the average amount rolled into new loans is near a record high at $7,107.
That’s up more than $200 from the second quarter and just off the record amount set at the end of the fourth quarter last year at $7,214.
Additionally, the average amount of negative equity has swelled by $1,262 since the percentage peaked in Q2 2020.
The car business moves fast. Stay ahead.
The most important insights from automotive retail, delivered to your inbox daily.
Join 74,000 others now, it's free:
Adding to the amount: Negative equity is being compounded by rising interest rates, which hit 7% for all loans, according to Edmunds.
For loans with negative equity, the rate is 8.1%.
That rate and negative equity are pushing the average amount financed on a new car to $57,235, making monthly payments $952 for the 78-month term, with $2,557 down on average.
That payment is roughly $165 more than the average loan, with also eight additional months on the term and $6,672 more in interest.
“High rates, high negative equity, and high transaction prices are pushing the consequences of negative equity into the stratosphere,” Joseph Yoon, senior analyst at Edmunds, told CDG News.
Bottom line: Negative equity remains a hurdle for consumers and dealers, but other economic factors are making it even more costly.
“Dealers have a role to play in helping consumers navigate these decisions, helping customers understand how much the existing debt they're carrying will impact their monthly payments and what that means for the total cost of their next vehicle, especially at current interest rates,” Yoon said.
A quick word from our partner
Auto Hauler Exchange is the only true vehicle logistics marketplace — connecting dealerships directly with 5,500+ vetted carriers nationwide.
No brokers. No hidden margins. Full rate transparency. Live ELD tracking. Secure in-platform payments.
Reduce dwell time. Cut transport costs 15–20%. Lower fraud risk.
Thousands of dealers are already moving cars smarter on AHX.
