“Underwater” or “Upside down” car loans.

There are over $1 Trillion of vehicle loans in the US, and the vast majority of loans have payoff balances, or amounts owed which exceed the current value of the vehicle. Many consumers would prefer to replace, sell, or trade-in their vehicle but are not able to get enough for the vehicle to payoff the current loan.

U.S. auto debt has continued to expand, ticking up to $1.32 trillion in the third quarter — an increase of $50 billion from a year earlier, according to the latest data from the New York Fed. The percentage of car loans in serious delinquency — with owners behind on payments by 90 days or more — also rose to 4.71% from 4.27% the previous year.

https://www.bloomberg.com/news/articles/2019-12-07/u-s-vehicle-loans-rise-to-record-highs-as-auto-debt-piles-up

The option of trading in the vehicle and rolling over the negative equity to another car just passes the problem into the future, and makes it worse because now the new vehicle negative equity is added to the old car.

At nearly $1.3 trillion, auto debt is the third largest form of household debt, after mortgages ($9.4 trillion) and student debt ($1.5 trillion). The amount of auto debt has increased by nearly 75 percent since the financial crisis, and a growing proportion it comes from lending to borrowers the industry calls subprime, because of their low credit scores. Many are low-income workers who don’t have access to other sources of financing.

https://www.wnyc.org/story/other-subprime-debt-problem/

Short sale vehicle transactions are an option to stop the chain of negative equity from increasing and burdening the consumer with debt.