August 2025
More than 1 in 4 trade-ins had negative equity in Q2 2025. The average monthly payment for buyers who rolled negative equity into a new loan climbed to $915 in Q2, according to Edmunds.
In today’s market, vehicle values can swing dramatically due to factors like the pandemic’s lasting impact on supply and demand, or new tariffs that affect pricing. For many borrowers, these shifts can lead to rapid depreciation, unexpected negative equity, and financial strain when it’s time to trade in or sell.
How can you protect your borrowers from negative equity?
AFG’s residual based financing program provides a built-in safeguard. By setting a guaranteed future value at the start of the term, borrowers know exactly what their vehicle will be worth at the end — and they have the option to simply return it and walk away if the market takes a turn. This helps protect them from owing more than the vehicle is worth, even in unpredictable times.
Keep reading to learn more about the impact of negative equity and how AFG’s program can help reduce or eliminate it while also providing a more affordable monthly payment.
Auto Finance Trends
🚘 Car buyers are piling on debt as negative equity hits record levels
Negative equity just hit a post-pandemic high, with over 26% of trade-ins under water. That means many car buyers are caught in a negative‑equity spiral, paying more in interest and struggling with affordability. AFG’s programs help your financial institution offer more affordable payments while reducing or even eliminating negative equity.
🚘 The quiet retreat of incentives—and what dealers are doing about it
“Automakers are trimming vehicle incentives ahead of expected price hikes.” While affordability takes another hit, AFG’s programs can help your financial institution make vehicle financing affordable for borrowers.
Events
🎥 AFG hosted two webinars on affordable vehicle financing and basics of residual based financing recently
You can still watch the recordings.
You can also still watch the recording of our popular webinar, “Increase ROI with Residual Based Financing”
🏢 Lendtopia
September 9-11
Austin, TX
CRIF Select User Forum
September 15 -17
St Petersburg, FL
Open Lending ELR
Austin, TX
September 21 – 24
ACU Lending Council Conference
November 2-5
Anaheim, CA
AFG will be in attendance at these events. If you’d like to learn more about our programs, you can make an appointment with an AFG representative.
Click here to schedule it.
AFG Partner Experience
Timberland FCU’s VP of Member Relations gives a first-hand perspective on how the AFG program helps their borrowers.
Spotlight on Affordability
Affordability is a critical concern for many borrowers in a highly fluctuating vehicle market. AFG will highlight a vehicle each month that showcases how the AFG walk-away balloon and vehicle leasing programs offer a more affordable payment compared to conventional financing.
