(NewsNation) — A growing number of car owners now owe more on their loans than their vehicles are worth, according to a new survey commissioned by the online car buying site CarEdge.
“As vehicle prices soar and depreciation accelerates, more car owners are finding themselves owing more on their loans than their cars are worth,” CarEdge concluded from a survey of nearly 1,000 drivers.
While 31 percent of all drivers who financed their cars are currently in negative equity, that number increases to 39 percent for vehicles bought in the past two years. That makes new car buyers especially vulnerable, says CarEdge.
“As vehicle prices increase and long loan terms become more common, the risk of being underwater is higher than ever,” it said.
The negative equity is far higher for those who bought electric vehicles. The survey said that 46% of EV owners are under water, with Tesla and BMW owners having the higher rates of negative equity.
One other surprising finding: 61 percent of the drivers surveyed overestimate how much their cars are worth. Roughly 17 percent believe their car is worth at least $5,000 more than its true trade-in value.
CarEdge said that the disconnect can lead to some unpleasant surprises for drivers when it’s time to trade in or sell their current cars.
