Get access to the same vehicle valuation tool that dealers rely on. With Black Book, you’ll have insider data to accurately assess trade-in and purchase values—empowering you to negotiate the best possible deal.
Negative equity, or owing more on a car loan than the vehicle’s market value, continues to rise as inflationary pressures and long loan terms take their toll on car buyers. CarEdge, in partnership with Black Book, surveyed 474 drivers in Q4 2024 to uncover the state of vehicle equity. Here are the highlights and the broader implications for drivers, car buyers, and the automotive industry.
In Q4 2024, 39% of drivers who financed their vehicles were underwater—up from 31% in Q3, a 25% jump. For cars purchased since 2022, the situation is even worse: 44% of these buyers owe more than their car is worth. As depreciation accelerates and long-term loans become the norm, the risk of negative equity continues to grow. This trend highlights a troubling financial burden on drivers and poses risks for the broader auto market.
Drivers Overestimate Their Car’s Value
Our survey reveals that 60% of drivers believe their car is worth more than its actual trade-in value. Of these, 18% overestimate by $5,000 or more, and 7% by over $10,000. This disconnect leads many to carry negative equity into their next car purchase, perpetuating financial strain.
When drivers attempt to trade in or sell their vehicles, they often face the harsh reality of lower-than-expected offers, which can derail their car-buying plans. Unfortunately, many choose to roll over the remaining debt into their next loan. This practice, while common, leads to higher monthly payments and extended loan terms, keeping buyers in a cycle of financial vulnerability.
Long Loan Terms Drive Negative Equity
Loan terms significantly impact vehicle equity. Borrowers with 84-month loans face a median negative equity of -$8,485, while those with shorter 36-month terms have a positive median equity of $7,783. While longer loans make monthly payments more affordable, they also leave buyers trapped in equity-negative positions for years.
For many buyers, the appeal of lower monthly payments outweighs the long-term risks. However, as loan balances decrease more slowly with longer terms, these borrowers are more likely to face financial strain when attempting to sell or trade in their vehicles. Buyers who opt for shorter terms and make larger down payments tend to build equity more quickly, putting them in stronger financial positions.
EV Owners Are Most at Risk
Electric vehicle owners face the highest negative equity rates, with 54% underwater and a median equity of -$2,345. This makes EVs particularly vulnerable compared to gas and hybrid vehicles, which are more likely to have positive equity.
The rapid depreciation of EVs is a key driver of this trend. EV technology can become outdated quickly as newer models with improved range, charging speeds, and driver assistance features enter the market. Additionally, concerns about costly battery replacements and limited resale demand have led many buyers to prefer new EVs with warranties and a known history, further impacting the resale value of used EVs.
For EV buyers, understanding depreciation trends and factoring in long-term costs is critical to avoiding significant negative equity. Opting for shorter loan terms and considering potential incentives or tax credits can help offset some of the financial risks. Buyers who plan to hold on to their EVs for longer than just a few years are less likely to be impacted by negative equity with their auto loans.
What Does This Mean for 2025?
As we head into 2025, the issue of negative equity looms large for both consumers and the auto industry. For car buyers, rolling over negative equity into new loans can lead to long-term financial stress, reducing their purchasing power and limiting options. For the auto industry, high levels of negative equity could dampen trade-ins and slow new car sales, forcing automakers and dealerships to adjust their strategies.
Car dealers also face challenges when appraising trade-ins with negative equity. To close deals, dealers may need to discount new vehicles more aggressively or offer creative financing solutions, which can erode profit margins. Over time, high levels of negative equity in the market can disrupt the typical sales cycle
Navigating the Negative Equity Challenge
The Q4 2024 Negative Equity Report paints a clear picture of a growing issue in the car market. Drivers, car buyers, and the auto industry alike must address the challenges posed by rising negative equity.
CarEdge remains committed to empowering consumers with tools and insights to navigate today’s challenging car market. To avoid falling into the negative equity trap, car buyers should prioritize shorter loan terms, be familiar with expected car depreciation, and monitor used car values with tools like Black Book. Overcoming negative equity is possible when drivers make informed car buying and ownership decisions.
If you’re asking, “When is a good time to sell your car?”, the answer is almost always sooner rather than later. In general, your car is worth more today than it will be tomorrow. However, there are nuances for some drivers that can change the dynamic. Here’s a closer look at when selling makes the most sense, and when waiting won’t hurt.
2025 Is Almost Here
As the calendar approaches 2025, it’s important to recognize that your car’s value will drop significantly once the new year begins. On January 1st, your vehicle will effectively be considered a year older, even if it hasn’t aged by much in terms of mileage or condition. This is because most car buyers and dealerships use model year as a primary factor in determining value. If you’re thinking about selling or trading in your vehicle, now is the time to act before the new model year triggers additional depreciation.
Mileage plays a big role in determining a car’s resale value. Two critical thresholds where cars typically lose significant value are at 100,000 miles and 150,000 miles. Once a vehicle crosses 100,000 miles, it’s seen as a higher maintenance risk, which can reduce its value by up to 20%. At 150,000 miles, the depreciation steepens further, as buyers become wary of potential expensive repairs. If your car is approaching one of these milestones, it may be time to consider selling before the value drops significantly.
If You Don’t Sell Before Year’s End, Wait for Tax Refund Season
If you decide not to sell before the end of 2024, your next best option is to wait until the spring, when tax refund season fuels a surge in used car demand. Historically, many buyers use tax refunds to purchase used vehicles, making it an ideal time to sell and get a better price. As demand rises, so do resale values. Timing your sale around this season can help you maximize your car’s value.
How Hurricanes Impact the Used Car Market
Hurricanes Milton and Helene brought devastation to the Southeastern US in October. As the cleanup continues, the new and used car markets are beginning to feel the impacts. With a large number of vehicles damaged by flood waters and wind, thousands of cars were taken off of the market for the time being. This has created a spike in demand and pricing, which could work in favor of sellers. However, keep in mind that replacing your car during this shortage may be more expensive, and the risk of flooded cars on the market warrants caution for car buyers and sellers alike.
All-Wheel Drive Vehicles: Sell Before Winter Ends
For those owning all-wheel drive (AWD) vehicles, selling now is a strategic move. AWD cars and SUVs are highly desirable in cold climates, making this the season when demand (and therefore resale value) peaks. As winter fades and spring approaches, buyers become less interested in AWD vehicles, leading to lower offers. By timing your sale to match seasonal demand, you can justify a higher selling price, putting more money in your pocket.
In general, holding onto a vehicle means watching its value decline. When it comes to playing it smart, the rule of thumb is to sell when demand is high and before your car depreciates further. Stay informed about your car’s depreciation with theCarEdge Research Hub, where you can compare depreciation, total cost of ownership, and more to make an educated decision about your next move. It’s free data for all!
It’s time to say goodbye to your old reliable car, but should you sell it privately or trade it in? Both options have their pros and cons, but with the right approach, you can minimize financial losses. Here are 10 tips to help you make the best decision.
10 Car-Selling Tips To Consider
1. Don’t name your price first
If a salesperson asks how much you want for your car, don’t give them a number. Let them make the first offer to avoid limiting your potential trade-in value. If asked, let them know that your primary interest is minimizing your net cost, or trade difference, after an allowance for your trade. Avoid providing any firm numbers, despite their repeated attempts to enquire, as they will be resolute in getting you to throw out the first number.
2. Tax benefits of trading in
Trading in your vehicle at the dealership can save you on sales tax. When you trade-in, you subtract the value of your car from the sales price of the new one, and you only pay sales tax on the difference in value. For example, if your trade-in is worth $20,000 and your state has a 5% tax, you could save $1,000 compared to selling it privately.
3. Don’t clean the car too early
If you’re just browsing, don’t clean out your car beforehand. A spotless trunk signals you’re ready to buy, potentially weakening your negotiation position.
4. Watch out for the higher offer trick
Dealerships may offer more for your trade-in but mark up the price of the new car. Don’t be fooled by the dealer that simply offers you the highest price for your car, as they may be getting you on the other side. Always look at the total cost.
5. Fix the obvious issues
If selling privately, get the obvious repairs fixed up front, and perform the routine service, like an oil and filter change. If your vehicle needs obvious repairs, private buyers will discount its value by at least 2X of the cost of the repair, as they will be concerned that it can’t be fixed, or that repairs will end up being more costly. Buyers don’t want to inherit a problem; they want a car that they can drive home with confidence, and is trouble-free.
6. Check your car’s history report
Run a vehicle history report before selling. Surprises on a report could deter buyers or lower your asking price. If you’re the original owner and have never had any problems or accidents, it’s possible to skip this step.
7. Organize vehicle documentation
Present your service records and manuals in an organized manner to instill buyer confidence. If you have them, make sure to include the vehicle registration, window sticker and any operating manuals that you received, so that you can present them to any possible buyer.
8. Trade where it makes sense
If your trade-in doesn’t match the dealership’s typical inventory, expect a lower offer. If you are at the BMW dealership, and you’re looking to trade in your 10 year-old Corolla with 120,000 miles, don’t expect a good offer. They won’t want your car, and will sell it straight to a wholesaler. Keep this in mind when thinking about a trade-in.
9. Meet in a public place
For safety, meet prospective buyers in public spaces like designated safe meeting zones rather than your home.
10. Pay off loans before selling
If possible, pay off any loans before selling. Having a clean title in hand, goes a long way towards resulting in a seamless transaction, versus having to get a bank involved. Sometimes banks will take weeks to send you a title that is free of liens, and that is enough to sour a lot of car deals. Similarly, make sure that you ask the private buyer how they intend to pay for the car.
Conclusion
Selling or trading your car doesn’t have to be stressful. By fixing minor issues, getting paperwork in order, and strategically timing your sale, you’ll increase your chances of getting a good offer. The more certainty you provide the buyer, the more they’ll be willing to pay. Learn more about resale values with CarEdge Research.
Did you know that depreciation makes up the biggest portion of the total cost of car ownership? When it comes to buying a new car, it’s important to consider how well it holds its value over time. Depreciation is the difference between the original sales price, and what the vehicle will be worth in the future. Some vehicles depreciate faster than others.
In this 2024 update, Toyota continues to dominate the list of cars with the best resale value, with multiple models making an appearance. Honda follows closely, proving once again that both brands know how to build cars that hold their value. Let’s take a look at the top contenders in terms of resale value in the first five years of ownership.
Jeep Wrangler
5-Year Residual Value: 75%
The Jeep Wrangler has long been known for its ability to retain value. After five years, it’s expected to depreciate just 34%, leaving you with a resale value of around $38,610 if you buy at today’s average selling price of $58,209. For off-road adventurers, the Wrangler’s value retention makes it a solid investment. See our full depreciation breakdown.
After a what feels like a lifetime, the 4Runner is getting a big refresh for 2025. We see no reason to worry about this legend’s reliability with the refresh, nor any damage to it’s phenomenal resale value.
Under normal ownership conditions, the Toyota 4Runner will depreciate just 39% after five years under normal use. With today’s average selling prices, this results in a resale value of about $31,593. If you’re looking for an SUV that holds its value while offering reliable performance, the 2025 4Runner should be on your short list. See our full depreciation breakdown.
The Land Cruiser is back after a short hiatus. As expensive cars sadly become the norm, it makes sense that Toyota would resurrect their luxury SUV with impressive off-road prowess. It’s quite expensive, especially for a Toyota. Today’s average selling price is a hair north of $73,000. After five years, the Land Cruiser retains 74% of its value, with an estimated resale price of $44,791. The time-tested Land Cruiser is a prime choice for anyone looking for a high-end SUV that keeps its value. See our full depreciation breakdown.
With a 5-year depreciation of just $10,127, the Toyota RAV4 is another excellent option for those looking for cars that hold their value. After five years, the average residual value will be around $27,520, making it one of the most practical choices for compact SUV buyers. See our full depreciation breakdown.
The Honda HR-V, the #3 crossover in America in terms of sales, retains 73% of its value after five years. Considering an average selling price of $29,164 when new, the average resale value after 5 years comes out to $21,266. It’s a great option for those who want a smaller SUV that still holds its value well. See our full depreciation breakdown.
The Honda CR-V is a top performer in the small SUV segment, losing just 28% of its value after five years. That leaves CR-V owners with an estimated resale value of $22,354 when starting at an average selling price of $38,461. The Honda CR-V is not just reliable; it’s a smart financial choice for those who care about SUV resale value. See our full depreciation breakdown.
They say it’s shockingly fun to drive considering the attainable price point. There’s yet another reason to love the Miata: low depreciation. The Mazda MX-5 Miata retains 72% of its value after five years, with an expected resale price of $23,885. Brand new, the MX-5 Miata sells for $36,239 on average as of 2024. Known for its sporty handling and fun driving experience, the Miata is one of the top choices for sports car buyers who also want excellent resale value. See our full depreciation breakdown.
The Toyota Tacoma is arguably the best pickup truck on the road for holding its value. After five years, it retains 72% of its value on average. That means after a new selling price averaging close to $47,000, buyers can expect a resale price of around $34,000 after five years. Its combination of reliability, durability, and value makes it a standout among mid-size trucks. See our full depreciation breakdown.
The Toyota Corolla proves that compact sedans can retain their value exceptionally well. With a 5-year depreciation of just 28%, a new Corolla purchased today is expected to retain 72% of its value. Its resale value, low cost of ownership and excellent fuel efficiency help the Corolla sedan survive the modern era’s shift to SUVs and crossovers. See our full depreciation breakdown.
No longer available as a sedan, the Impreza is officially a hatchback for 2024 and 2025. The Subaru Impreza holds onto 72% of its value after five years, with an expected resale price around $19,882. Subaru’s reputation for reliability and standard all-wheel drive make the Impreza a smart choice for those looking for value retention in a sedan that can handle every season. See our full depreciation breakdown.
When it comes to finding cars that hold their value, these cars, trucks, and SUVs are at the top of the list. Time and time again, Toyota and Honda continue to dominate. For 2024 and 2025, other brands like Subaru and Mazda also offer strong contenders for those who shop with resale value in mind.
Need help finding the perfect car with great resale value? Let CarEdge Concierge do the negotiating for you. We’ll help you find the best deals, negotiate the price, and even deliver your new car to your door. Learn more about CarEdge’s car buying service.
When buying an SUV, one thing you’ll want to keep in mind is depreciation. Some SUVs lose value faster than others, which can lead to a lower resale value when you’re ready to trade in or sell. With the consumer in mind, we’re highlighting five family-sized SUVs with the worst depreciation. Although depreciation may not be a dealbreaker, knowing what to expect before making your purchase is always smart. All data is based on the latest 2024 depreciation calculations from CarEdge. Not seeing the model your interest in? See all of our SUV depreciation data here.
Nissan Armada: 52% Value Loss Over 5 Years
5-Year Residual Value: 48%
The Nissan Armada is a full-size SUV with plenty of space and power, but its value drops significantly after just five years. With a 52% depreciation rate, the Armada will have a resale value of around $32,604 after half a decade. For buyers, this could be something to consider, especially if you plan to resell or trade-in the vehicle later.
These depreciation numbers assume the vehicle is in good condition and has been driven an average of 12,000 miles per year. The average selling price for a new Armada is around $68,438.
The GMC Yukon XL is known for its room for the family, but it also has one of the highest SUV depreciation rates. After five years, the Yukon XL will lose around 52% of its value, with a resale price of approximately $42,083. This assumes the average selling price of $87,399, so the depreciation adds up to tens of thousands of dollars rather quickly.
The Buick Enclave combines comfort and attainable luxury in a mid-size SUV package, but it comes with a significant depreciation cost. Today, the average selling price of a new Buick Enclave is $54,186. After five years, the Enclave will depreciate by about 51%, leaving it with a resale value of just $26,416. This might make you think twice, especially if selling your Enclave is a possibility in the next five years.
The Nissan Pathfinder is a legendary mid-size SUV, but it too suffers from a significant depreciation rate. After five years, expect a 49% loss in value, leaving you with a resale price of $23,921. The Pathfinder’s strengths remain, but the depreciation hit is worth keeping in mind.
The Ford Expedition is one of the top three-row SUVs on sale, but it doesn’t hold onto its value as well as some might hope. After five years, the Expedition loses around 49% of its original value. While it’s packed with features, room for eight, and carries a solid reputation, the depreciation hit will cost buyers over $30,000 in resale value after just five years.
When shopping for an SUV, depreciation is a key factor that can greatly affect your long-term cost of ownership. The SUVs listed above have some of the worst depreciation rates in the market, meaning they lose significant value over time. If there’s even a small possibility that you could be selling in the next five years, depreciation should be a top factor in your decision making.
Want expert help to navigate your next SUV purchase? Let CarEdge Concierge do it for you. Whether you’re buying new or used, our team will negotiate the best deal for you and ensure you’re getting the most value for your money. Learn more about CarEdge’s car buying service.
Buying a truck is a costly endeavor, but not all trucks hold onto their value the same way. Some depreciate faster than others, leaving truck owners with less resale value down the road. In this deep dive, we’ll take a look at five trucks that don’t fare well when it comes to depreciation, so you know what to watch out for.
CarEdge’s depreciation rankings were updated with the latest data in 2024, giving you insights on which models are most likely to drop in value in 2025 and beyond. When we talk about “5-year residual values,” we’re referring to the percentage of a vehicle’s original value that it retains after five years. The higher the percentage, the better it holds its value—but for these trucks, the numbers aren’t looking too good.
Ford F-150: 49% 5-Year Residual Value
The Ford F-150 might be a top-selling truck, but when it comes to value retention, it’s the worst. After five years, the F-150 will have lost around 51% of its original value, leaving you with a resale price of about $30,245. While it does well in the first few years, it starts to lag behind rivals like the Chevy Silverado as time goes on.
Should you avoid this truck? Not necessarily, but be aware of how fast it loses value. If you’re deciding between the F-150 and another truck, it might be worth considering factors other than just resale value, like features, towing capacity, or reliability. For instance, both the Chevy Silverado 1500 and Ram 1500 pickups maintain their value better than the F-150.
The chart above shows the expected depreciation for the next 10 years. These results are for vehicles in good condition, averaging 12,000 miles per year. It also assumes a selling price of $61,927 when new. This is the average selling price of a new F-150 today.” See our full depreciation analysis for the Ford F-150.
The GMC Sierra 2500 HD doesn’t depreciate quite as quickly as the F-150, but it still loses around 45% of its value over five years. If you buy one new at the current average selling price of $87,897, expect it to be worth around $48,247 after five years.
Heavy-duty trucks like the Sierra 2500 often fare better in the long run, thanks to their durability and strong market demand. But even with that in mind, a nearly 50% drop in value is something to keep in mind if you’re looking at this model.
The chart above shows the expected depreciation for the next 10 years. These results are for vehicles in good condition, averaging 12,000 miles per year. It also assumes a selling price of $87,897 when new. See our full depreciation analysis for the Sierra 2500.
Similar to the Sierra 2500, the Ford F-250 Super Duty retains just over half its value after five years. Starting at an average selling price of $72,489, it’s likely to be worth about $39,833 after that period. That’s a depreciation of $32,656, which isn’t insignificant for a heavy-duty truck.
The Nissan Titan depreciates a bit more slowly than others on this list, but it’s still going to lose about 52% of its value in five years. From a starting price of $58,711, you’ll be looking at a resale value of around $28,463 after half a decade.
Nissan’s full-size truck may not be as popular as the F-150 or Silverado, but if you’re a fan of what it offers, be prepared for its resale value to dip more than average.
The chart above shows the expected depreciation for the next 10 years. These results are for vehicles in good condition, averaging 12,000 miles per year. See our full depreciation analysis for the Titan.
Chevrolet Silverado 2500 HD: 59% 5-Year Residual Value
The Chevy Silverado 2500 HD edges out the Titan with a 5-year residual value of 59%, meaning it loses 41% of its value over that time. If you purchase one for $66,710, expect it to be worth about $39,139 after five years.
It’s important to remember that these are the trucks with the worst depreciation. Several popular models fare better, including the Chevrolet Silverado 1500, GMC Sierra 1500, and trucks from Ram and Toyota. Browse our complete depreciation rankings for free.
In the market for a new or used truck? Let us do the negotiating for you. CarEdge Conciergeis the best-rating car buying service in America. Learn moreabout how we can deliver your next truck to your door, all while saving you thousands of dollars.
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