Nearly 30 percent of trade-ins carried negative equity in Q2 2026. The average underwater loan balance reached a record Q2 high of $6,884.
Popular trucks and SUVs are now often trapped by expensive financing.
According to Edmunds' second-quarter data, 29.6 percent of all trade-ins toward new vehicle purchases carried negative equity.
Nearly three out of every 10 buyers walked into a dealership already owing more on their current vehicle than it was worth.
The amount of debt being rolled into new loans is climbing too.
The report says the average underwater trade-in carried $6,884 in negative equity during the second quarter.
That debt gets folded into the next loan, creating a financial snowball that can follow owners from vehicle to vehicle.
Buyers carrying negative equity into a new car loan are now paying an average of $944 per month.
That is $167 more than the industry-wide average.
Those borrowers are expected to pay an average of $16,270 in interest over the life of their loans.
That is nearly $6,500 more than the typical new-vehicle buyer.
Popular Trucks and SUVs Hit Hard
Many of the biggest negative-equity trade-ins are popular trucks and SUVs that traditionally retain value well. Examples include the Toyota Tacoma, Jeep Wrangler and Honda CR-V.
“It’s easy to assume negative equity is just a story about vehicles that depreciate quickly,” said Ivan Drury, Edmunds’ director of insights.
“When historically safe residual value bets are showing up underwater, it’s clear this is a financing problem, not always a vehicle choice problem.”
A big part of today’s problem can be traced back to 2022. Inventory shortages pushed prices skyward and many buyers paid at or above sticker price.
Those vehicles are now reaching the point where owners want to trade them in. They discover they’re still carrying substantial debt.
Among the models with the highest negative equity in Q2 2026, the Toyota Tundra averaged -$8,929.
The Chevrolet Silverado 1500 averaged -$8,516, and the GMC Sierra 1500 averaged -$8,568.
The Ford F-150 averaged -$8,417, and the Ram 1500 averaged -$8,347. The Jeep Wrangler averaged -$7,867, and the Toyota Tacoma averaged -$7,793.
