Record number of buyers upside down on trade-in

Record number of buyers upside down on trade-in

A record number of car buyers are –underwater” on their trade-in, as they take longer loans to lower their monthly payments but come back to the new-car market before they have equity in their old car. An estimated 32 percent of all trade-ins toward the purchase of a new car through September were upside down, by an average of $4,832, according to Edmunds.com.

–With todayês strong economic conditions at their back, these shoppers are willing to absorb a significant financial hit to get into a newer vehicle, said Edmunds.com Senior Analyst Ian Drury. Edmunds recommends leasing as an alternative, and leasing is at a record high of 33 percent.

Used-car buyers also are dealing with negative equity. A record 25 percent of trade-ins toward a used car purchase in the third quarter were underwater, by an average of $3,635.

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