Trade-ins in negative equity hit a record high in the second quarter, nearly three out of 10 trade-ins toward new vehicles in an under-water position.

According to Edmunds, it was the highest second-quarter figure since 2020 in the depth of the Covid pandemic.

“Consumers are incurring more debt than ever when trading in vehicles that are underwater," said Edmunds Head of Insights Jessica Caldwell.

"Buyers who financed at 2022's peak prices are starting to come back to trade in, and they're bringing thousands of dollars in old debt with them.”

The average negative-equity amount in the quarter was $6,884, which Edmunds marked as a record high for a second quarter. The surge has led to the highest figure the automotive data provider has on record for average monthly payments on new-vehicle loans with a negative equity trade-in: $944.

Edmunds said buyers who roll negative equity into a new loan “are projected to pay an average of $16,270 in interest over the life of that loan,” another all-time high.

Caldwell further explained that when buyers rely on longer loan terms to lower monthly payments it ultimately makes their total interest charges increase over time.

In another second-quarter record, the average age of a trade-in with negative equity reached four years, which Edmunds said aligns with vehicle purchases in 2022, when there was “limited inventory, minimal incentives, and transactions at or above MSRP.”

Models with the highest negative equity were largely trucks and SUVs, the Chevrolet Silverado 1500 and Ford F-150 holding the top two spots.