Car debt has reached record levels, and a growing number of car owners owe more on their vehicles than they are worth, new data published on Wednesday shows.

More than one in four new vehicle owners owe more on their cars than they are worth and carry more than $10,000 in debt, according to a press release from Edmunds, an online car buying resource.

Ivan Drury, Edmunds' director of insights, said this trend stems from loans taken out during the COVID-19 pandemic and people trading out their cars too quickly.

“Much of this stems from shoppers trading out of vehicles too quickly, or carrying loans taken out during the pandemic car market frenzy, when prices were at record highs. Those choices are now catching up, making it far harder to buy again without piling on even more debt,” Drury said in the press release.

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Edmunds suggests canceling add-on products like extended warranties, service contracts and wheel-and-tire protection before returning a vehicle to improve its payoff-to-value ratio.

Joseph Yoon, Edmunds’ consumer insights analyst, says consumers can still reduce their debt.

“For many car owners, there’s no quick fix for being underwater. It’s about minimizing how much deeper you go,” Yoon said.

“If you can, wait until you’ve paid down more of your balance before trading in. But if you do need to replace your car, make sure your next purchase fits your budget, not just your needs. The right vehicle choice can prevent a short-term decision from becoming a long-term setback,” he added.

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According to Carfax, a vehicle data, listings and valuation company, the value of a new car falls by around 20% in its first year, and then 15% each subsequent year.

The average price of a new car is now over $50k for the first time, according to Kelley Blue Book, a vehicle information service, and the average monthly car payment is $749, according to Experian, a major credit reporting bureau.