Americans are underwater on car loans. They're buying new cars anyway.

More Americans are trading in underwater vehicles.

That does not mean the vehicles are submerged. In a sense, the drivers are.

More than one in four trade-ins had negative equity in the third quarter of 2025, Edmunds reports. In auto industry parlance, the loans were underwater.

Of all used vehicles traded in toward a new car purchase between July and September, 28.1% had negative equity. That means the vehicles were worth less than the owner owed on a car loan.

The figure marks a four-year high.