Negative equity calculator
Is your trade-in helping or hurting?
The honest number the dealership won't lead with.
You are underwater
Trading in now rolls this shortfall into your next loan.
−$4,500
31 months
$5,220
From the lending desk
“We'll pay off your trade no matter what you owe” means the shortfall gets rolled into your new loan. You still pay it — plus interest.
Understanding negative equity
Why the gap opens, and what actually closes it.
What is it?
Negative equity means you owe more on your loan than your car is worth. It is common early in a loan, when depreciation runs faster than your payoff schedule.
Why it happens
Cars lose value quickly, especially in the first one to two years. If you financed most of the purchase price, the balance can stay above the vehicle's value for a while.
Options if you're underwater
- Keep the car longer while you pay the balance down
- Make a lump-sum payment to close the gap faster
- Refinance to a lower rate — only if the term does not stretch
Rolling it into a new loan
Rolling the balance forward raises your next payment and keeps you underwater longer — you start the new loan already behind. Avoid it if you can wait.
Key takeaway
Trading in today hands $4,500 to your next loan, and financing it over 60 months costs $5,220. Waiting about 31 months is the cheapest fix available to you.
What's next
Now that you know where you stand, take the next step.
Need help with the terms? View the glossary or check the FAQ.