Well, here we go again with underwater American consumers - only this time it's autos, and not houses, that are upside down these days.
Here's the deal. A new study shows one-third of U.S. vehicle owners are underwater on their auto trade-ins, meaning they owe more than the vehicle is worth.
According to Edmunds.com, "about 32% of all trade-ins toward the purchase of a new car this year have negative equity." Also, "upside down" auto consumers "had an average of $4,832 of negative equity at the time of trade-in, also a record."
How did so many Americans get into this predicament? Hubris might be part of the reason.
"It's curious to see just how many of today's car shoppers are undeterred by how much they owe on their trade-ins," says Ivan Drury, Edmunds.com senior analyst. "With today's strong economic conditions at their back, though, these shoppers are willing to absorb a significant financial hit to get into a newer vehicle."
Some industry experts blame high sticker prices and problematic financing deals for the underwater issue.
"The rising cost of new cars has many consumers extending their finance terms rather than increase their down payment to lower payments," notes Jim Dykstra, founder of Vinadvisor in San Francisco
That scenario not only increases the length of time a consumer is "underwater" but also their risk, Dykstra explains. "If a consumer who is underwater today by $4,000 has a total loss -- due to theft or accident -- they will be required to pay the $4,000 immediately," he says.