""affordability pressures-from elevated vehicle prices to higher interest rates-are compounding the negative effects of decisions like trading in too early or rolling debt into a new loan. And as buyers take on new loans with much higher interest rates than those from just a few years ago, even potential tax deductions can't meaningfully offset the thousands more they'll pay in interest,""
""That tax deduction, which is tucked away in President Donald Trump's massive 940-page tax bill that was signed into law July 4, allows many people, for the first time, to deduct interest on their vehicle loans; and it is available whether or not taxpayers itemize deductions. However, the vehicles must be new and assembled in the U.S., and the loans issued no sooner than this year.""
More than one-quarter of new-vehicle trade-ins carried negative equity in Q2 2025, reaching 26.6%, up from 23.9% in Q2 2024 and 26.1% in Q1 2025. Average amounts owed by upside-down borrowers rose to $6,754 in Q2 2025, compared with $6,255 a year earlier and slightly below $6,880 in Q1 2025. Contributing factors include elevated vehicle prices, higher interest rates, early trade-ins, and rolling existing debt into new loans. A new tax provision allows interest deductions on qualifying new, U.S.-assembled vehicle loans issued this year, but potential savings likely do not offset higher interest costs.
Read at Fast Company
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