Americans with upside-down car loans owe more money than ever before — and drivers can’t keep up. 3 ways to stay ahead

The average amount owed by Americans in upside-down car loans climbed to an all-time high of $6,838 in December 2024, according to research by Edmunds.

When you owe more in car payments than what your car is currently worth, you have negative equity or an “upside-down” auto loan.

The same report highlighted that one in four vehicles traded in for new cars had negative equity upwards of $10,000.

"A growing share of trade-ins are hitting the double-digit mark in thousands of dollars owed, making the cycle far more challenging for consumers to escape," Jessica Caldwell, head of insights at Edmunds, writes in the report.

Several factors contributed to this, including the Federal Reserve's aggressive interest rate hikes, which drove car prices higher. While the recent rate cuts provided some relief, the cost of financing car purchases is still quite high. The average monthly payment on a new car was $754 in the fourth quarter of 2024.

If you’re struggling with car payments, here are three things you can try to get your head above water.

Stop getting ripped off by your auto insurer

Car payments aren’t the only thing coming out of drivers’ pockets. To have your car on the road, you also need insurance.

According to a report by Insurify, the average annual cost of car insurance now sits at $2,329 as of June 2024. That’s $194 per month.

But, depending on which state you live in, your driving history and the make and model of your car, there are some insurers that can offer you far less than what you're currently paying.

Thanks to OfficialCarInsurance.com, comparing multiple insurance companies is easier than ever.

Just answer a few basic questions and type your info into the specified fields, and you'll instantly get a selection of quotes to choose from.

How OfficialCarInsurance.com helps you save

Based on your response, they’ll sort through leading insurance companies in your area, and find you the lowest rate possible.

The process is 100% free and won't affect your credit score—guaranteed. Because insurance inquiries don't require a hard credit pull, you can confidently and safely browse insurance offers no matter your current financial reality.

In the same amount of time it takes to watch a cat video on YouTube, you can find rates as low as $29 a month.

There’s no reason not to at least try this free service. Visit OfficialCarInsurance.com today and take a turn in the right direction.

Refinance your car loan

For the last few years, the Fed’s high interest rates have contributed to higher monthly payments, with average rates on new cars standing at 9.01%, according to Cox Automotive.

But with interest rates coming down, you can save substantially by refinancing your car loan at a lower rate. According to a report published by LendingTree, people who shop around for rates can save up to $5,198 on average.

Also, if you have improved your credit score since taking out your initial loan, it might be time to refinance your loan at a lower rate.

You can compare auto loan refinance rates offered by lenders near you through LendingTree.

Here’s how it works: Just answer a few simple questions about yourself and the vehicle you drive — and LendingTree will connect you with two to five lenders from their network of more than 300 lenders.

You may be eligible for refinance loans starting at 3.50% APR¹ through LendingTree’s network.

The best part? The process is completely free and won’t hurt your credit score.

Save at the pump with a gas credit card

While gas prices dropped slightly last year, Americans still feel the pinch. According to the Bureau of Labor Statistics, American households spent about $204 on gas per month in 2023 – adding up to $2,449 annually.

Patrick De Haan, head of petroleum analysis at GasBuddy, predicts gas prices will rise by 25 to 75 cents per gallon if President Trump imposes 25% tariffs on imports from Canada. This move could put a strain on your pockets.

You can ease this burden by signing up for a gas credit card, which allows you to earn points or cash back every time you fill up your tank.

You can compare the best gas credit cards available for free through CompareCards.com.

While a ten-cent discount or a 5% discount may not seem like much, the total discounts can quickly add up over time.

CompareCards.com makes the process of choosing a credit card quicker and easier. You can view and compare the rewards structure and other features like annual fees and sign-up bonuses side by side, helping you make an informed decision.