Negative Equity on Vehicle Trade-Ins Hits Record Highs in Q2 2026 — Edmunds.com Inc.

Event summary

29.6% of trade-ins toward new-vehicle purchases had negative equity in Q2 2026, the highest Q2 figure since 2020.
The average negative equity amount in Q2 2026 was $6,884, a record high for a second quarter.
The average monthly payment for a new-vehicle loan with negative equity reached $944 in Q2, the highest figure on record.
Buyers rolling negative equity into a new loan are projected to pay an average of $16,270 in interest over the life of that loan.

The big picture

The record levels of negative equity in Q2 2026 highlight a broader trend of consumers carrying over significant debt from previous loans, exacerbated by elevated interest rates. This financing problem is not limited to specific vehicle models but affects even those traditionally known for holding their value well. The situation underscores the need for more sustainable loan structures and better financial planning among consumers.

What we're watching

Debt Accumulation: How the increasing negative equity will affect consumer spending power and long-term debt accumulation.
Loan Terms: Whether longer loan terms will continue to be used as a coping mechanism to manage high monthly payments.
Market Trends: The pace at which vehicle prices and interest rates will adjust to mitigate the negative equity crisis.