The official term is "negative equity," but in car dealer talk the term is "upside down."
Being upside down in a vehicle is nothing new. However, the resale price for gas-guzzling SUVs and large pickup trucks has plummeted in recent months, leaving owners with a vehicle worth a lot less. For those who financed most of their vehicle purchase, they find themselves with a loan balance far greater than the vehicle's current worth.
The problem is a daily occurrence at many car dealerships, where drivers with longer commutes are seeking to trade for a car that gets more miles per gallon.
Butch Miller of Milton Martin Honda said he gets SUV trade-ins daily. "We're trading for them (SUVs) left and right, but in turn, we're placing them with other dealers," Miller said.
He said there have been instances where customers are upside down in their cars by as much as $15,000 to $20,000.
Sometimes, financing sources may add a portion of the negative equity to the financing of the new car.
Lindsey Exley, lending manager for Hallco Community Credit Union, said many of her borrowers are turning to used cars.
"We've been financing a lot more used vehicles," Exley said. "They're looking for something they can handle in terms of finances. They're looking for something good on gas that will get them from point A to B."
She said one of her co-workers had been seeking to trade a six-cylinder vehicle for a four-cylinder model, and the trade offer was for far less than she owed. "I guess it just wasn't meant to be," Exley said.
Barclay Rushton, a Gainesville accountant, said there is a point at which gas savings can offset the negative equity.
"For instance, if you're $5,000 upside down in your car and you're going from a vehicle that gets 10 miles per gallon to one that gets 25 miles per gallon, and you're driving 15,000 miles a year, you buy 900 less gallons of gas. At $4 a gallon, that's $3,600." Rushton said. "The second year, you make up the $5,000 and you're in the money."
He said he remembers when people got nervous when gasoline reached $1.50 a gallon and they had to keep their cars for five years. "Now, at $4 per gallon, sometimes it makes sense to get out," he said.
But it appears it still can get worse. Friday, crude oil prices made their biggest single-day leap ever. On Wall Street, the Dow plunged 394.64 points, more than 3 percent, to close at 12,209.81. That's the biggest drop in more than 15 months in terms of both percentage and points.
Wall Street had managed to shrug off oil's advance on Thursday but succumbed to extreme anxiety Friday. The stock market's great concern of late has been whether consumers would curb their spending on nonessentials as they were forced to pay more for gas and other staples.
The previously unthinkable idea of $150-a-barrel oil, and gasoline that will keep climbing above $4, made it clear to investors that consumers would be forced to be even more conservative than they have been in recent months.
Before Thursday, oil had receded nearly $13 a barrel from its recent record highs. But the end of the week sent it right back up again.
The burst in oil prices also raised the prospect of accelerating inflation by adding to already strained transportation costs, which will send prices higher in all sectors of the economy.
The Associated Press contributed to this report.