How to get out of an upside-down car loan

As car prices and interest rates climb, a growing share of Americans owe more on their car than it's actually worth — a situation referred to as an "upside-down" or "underwater" car loan . In the final quarter of 2025, roughly 30% of trade-ins came with negative equity, according to car shopping site Edmunds . The average amount owed hit an all-time high of $7,214. Having a trade-in with negative equity means you'll have to pay your balance out of pocket or roll it into a new loan. …