Recent data from a SuperMoney 2020 auto loan industry study reveals that vehicle financing has reached unprecedented levels, resulting in a significant number of consumers finding themselves with vehicles carrying high loan balances surpassing their current market value. This situation has prompted a surge in lenders exploring short sales on vehicles, offering borrowers an alternative to navigate through the challenges of upside-down auto loans.

Auto Loan Debt Hits Record Highs

The study highlights that auto loan debt has soared to an astounding $1.2 trillion, with the average loan amount reaching $32,000. This substantial increase of 81 percent over the last decade underscores the growing burden of auto loan debt on consumers.

The Challenge of Upside-Down Auto Loans

For many vehicle owners, the loan amount exceeds the appraised value of the vehicle. This situation is particularly concerning because, in practical terms, it limits the options for those looking to sell their vehicles. With an average loan amount of $32,000, and the average vehicle likely worth less than that, owners may find themselves trapped in their loans, unable to sell or trade-in without incurring significant negative equity.

Lenders Respond with Short Sale Programs

In response to the escalating issue of upside-down auto loans, major auto lenders like TD Bank are implementing specific programs to assist borrowers facing financial hardships. TD Bank provides information on their website about various workout plans, including a dedicated section on automotive, boat, and RV loans. They acknowledge the challenges faced by borrowers and have established a short sale program designed to help those with an offer on their automobile that is less than what they owe.

TD Bank’s Short Sale Program

The FAQ page on TD Bank’s website outlines the process and requirements for their short sale program. Borrowers facing difficulties in making payments or having offers lower than their loan amount are encouraged to discuss the short sale program with a specialist. The lender specifies the necessary documents, including proof of income and details about the asset in question. Importantly, TD Bank recognizes the need for borrowers to explore options such as short sales when dealing with upside-down auto loans.

The Benefits of Short Sales for Borrowers and Lenders

Short sales offer a beneficial alternative to both borrowers and lenders. For borrowers, it provides a way to sell their vehicles at market value even when the loan amount exceeds the appraised value. This can prevent the accumulation of further negative equity and potential repossession consequences. For lenders, facilitating a short sale can save significant costs associated with repossession, auction fees, and the subsequent sale of the repossessed vehicle.

Exploring Short Sale Solutions

Short sales are not a new concept, having been extensively used during the real estate crash of 2007-2009 to prevent foreclosures. Now, lenders are extending similar mechanisms to the auto loan sector to help borrowers avoid repossession and resolve their upside-down vehicle loans.

Seeking Resolution for Upside-Down Auto Loans

As the auto loan industry grapples with record-high debt levels, borrowers are encouraged to explore short sale solutions offered by lenders like TD Bank. Understanding the process and requirements, as outlined on TD Bank’s website, empowers consumers to take proactive steps in resolving upside-down auto loans. For more detailed information about the short sale process and to explore how lenders are addressing this issue, visit

The surge in auto loan debt underscores the need for innovative solutions, and short sales emerge as a valuable option for both borrowers and lenders alike. By navigating through these challenges, consumers can regain financial flexibility and avoid the pitfalls of being trapped in an upside-down auto loan.

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