‘Underwater’ Car Loans Signal US Consumers Slammed by High Rates

Prices for new vehicles are high. Interest rate hikes have made loans more expensive. And many car owners now owe more on their loans than their vehicle is worth.

  • This situation — commonly called being “underwater” or having “negative equity” — occurs when the price of a car falls faster than the owner can pay down the loan for it.

In November, people with negative equity were underwater by an average of $6,054, the most since April 2020 and well above pre-pandemic averages.

  • It’s a precarious spot for many Americans, coming after a twin surge in car buying and interest rates has strained finances and fueled an uptick in automobile repossessions.

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