Underwater Car Loans Hit Four-Year High in New Sign of Distress

A rising number of Americans are trading in vehicles worth less than what they owe, the latest sign of stress in the automotive industry.

Just over 28% of trade-ins toward new-car purchases carried negative equity, the highest level since the first quarter of 2021, according to data released Wednesday by automotive research firm Edmunds.com. The amount owed on those so-called underwater loans was $6,905 in the latest quarter, a record high.

“The sheer amount of debt consumers are carrying in their trade-ins should be a wake up call,” Ivan Drury, Edmunds’ director of insights, said in a statement. ...