🚗💸 As living costs keep climbing in the U.S., more Americans are sinking under the weight of their auto loans. Experts report that “underwater” loans—where borrowers owe more than their car’s market value—have reached their highest level in four years.
Why does this matter? When a loan is underwater, it means if you try to sell or total your car, you’d still owe money after the sale. Right now, borrowers owe more than ever before on their vehicles, leaving many feeling trapped as monthly payments eat up a growing chunk of their budgets.
Driving factors include higher interest rates and rising used-car prices. Younger buyers, in particular, are stretching loan terms to 72 months or more to lower monthly bills—only to end up paying extra in interest and risking deeper debt if their cars depreciate faster than expected.
Financial advisors recommend budgeting carefully, considering shorter loan terms if possible, and keeping an eye on resale values. For those already underwater, refinancing at a lower rate or making extra payments when you can could help chip away at the balance faster.
💡 Key takeaway: With auto debt at record highs, staying informed and planning ahead can keep your ride—and your wallet—on the road to recovery.
Reference(s):
cgtn.com
