More Americans are upside down on their car loans, and the average amount they owe is at an all-period high, according to a recent survey from car comparison site Edmunds.

In the three months ended in September, 24.2% of Americans who traded in their car toward a recent vehicle purchase owed more on the trade-in than it was worth, which is considered “upside down” or “underwater,” Edmunds said. That’s up from 23.9% in the prior three months and 18.5% a year ago. Additionally, the amount they owed on those trade-ins climbed to a record high of $6,458, with 22% owing at least $10,000 and 7.5% owing $15,000 or more, it said.

Auto loans account for about 25% of nonmortgage customer capitalization, according to the Federal safety net, and they can provide a window into the economic well-being of borrowers and overall household financial well-being.

“Consumers owing a grand or two more than their cars are worth isn’t the complete of the globe, but seeing such a notable distribute of individuals affected at the $10,000 or even $15,000 level is nothing short of alarming,” said Jessica Caldwell, Edmunds’ head of insights.

Why are so many Americans underwater on car loans?

Various factors are contributing to the pattern, Edmunds experts said.

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First, Americans who bought recent vehicles during the inventory crunch of 2021-2022, just after the COVID-19 pandemic, paid peak prices, Caldwell said. They “paid over MSRP (manufacturer’s suggested retail worth), so they didn’t chip away at the principle of their loans in a traditional manner,” she said.

Then, as manufacturers replenished inventories and the economy slowed, automakers reintroduced incentives, which cut trade-in values for near-recent vehicles, Caldwell said.

Finally,  car shoppers are stomaching higher prices by “increasingly opting into longer loan terms to reduce monthly payments,” Caldwell said.

Those longer loan terms, coupled with market activity in vehicles earlier than they should, put car owners at uncertainty of rolling negtive stake into their next loan, she said.

Edmunds separately found that even with longer loan terms, recent-vehicle shoppers are taking on $1,000-plus monthly payments at near-record levels. These buyers made up 17.4% of recent-car shoppers from June through September, it said.

A Federal safety net study last month found higher monthly car payments usually led to higher delinquencies.

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Who’s most likely to be underwater?

 It can be anyone. Negative stake is prevalent across all vehicle types being traded in, Edmunds found.

For example, midsize SUVs, compact SUVs and large trucks made up 19.5%, 17.3% and 10.3%, respectively, of all vehicles traded in with negative stake.

“It’s straightforward to assume that only specific consumers market activity in higher-ticket luxury vehicles are the ones underwater on their car loans, but the reality is that this is a issue across the board,” said Ivan Drury, Edmunds’ director of insights.

How can Americans avoid being underwater on a car loan?

Americans should keep up with regular maintenance and hold on to their cars as long as feasible to avoid additional declines in worth, Edmunds said.  

If you must buy a car, Drury said:

• Shop around for incentives and lower APR capitalization, although those are less ordinary in this economy.
• Consider vehicles proven to have higher resale values, or ones that propose other financial benefits like better mpg (miles per gallon) or lower insurance costs.
• discover a car you really desire and like, “because if you don’t, you’ll probably complete up making the same mistake of market activity in your newish vehicle too soon,” he said.

Medora Lee is a money, markets, and expense management reporter at USA TODAY. You can reach her at [email protected] and  subscribe to our free Daily Money newsletter for expense management tips and business information every Monday through Friday morning.