Americans increasingly upside down on auto loans as used car values fall

foxbusiness.com:

Nevada ranked the second highest auto insurance rates in the country, according to Insurify.

Used car prices are starting to edge down after soaring for years after the pandemic hit, and while the trend is a much-welcomed relief for buyers, it is also causing trouble for some consumers who purchased their vehicles at higher prices.

Edmunds' latest used vehicle report found a growing number of Americans are upside down on their auto loans as used prices decline, and the average amount consumers are underwater is at an all-time high.

Used vehicle prices have eased from a year ago, but the average amount consumers are upside-down on car loans hit a record high. (Steve Pfost/Newsday RM via Getty Images / Getty Images)

The report found the average transaction price (ATP) for all used vehicles declined to $28,371 in the fourth quarter of 2023, a 4.4% decrease from the same quarter the year before, when the ATP sat at $29,690.

At the same time, the percentage of new vehicle sales that had a trade-in with negative equity jumped to 20.4%, up from 17.7% in 2022 and 14.9% in 2021.

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Now, the average amount consumers owe on upside down loans is at a record high of $6,064, up from $5,347 in fourth-quarter 2023 and $4,143 in 2021, the data found.

Used vehicle prices are finally coming down after soaring during the pandemic. (Photographer: David Paul Morris/Bloomberg via Getty Images / Getty Images)

«A storm is brewing in the used market as incentives and inventory continue to trickle back into the new vehicle market,» said Ivan Drury, Edmunds' director of insights. 

«With demand for near-new vehicles on the decline, used car values are depreciating similarly to the way