Negative equity trade-in calculator

Negative equity means your loan payoff is greater than the vehicle’s trade-in or sale value. For example, if a lender’s payoff quote is $18,000 and the trade offer is $15,000, the difference is $3,000. That shortfall still has to be addressed when you sell or trade the car; a dealer promise does not erase the debt.

Subtract the vehicle’s current trade-in offer from a dated loan payoff quote: payoff minus value equals negative equity when the result is above zero. Use the lender’s payoff amount for the expected transaction date, because it can differ from the balance on a recent statement. Enter both numbers in the calculator to see the possible effect on a replacement loan.

You can ask a dealer to evaluate a trade-in with negative equity, but the unpaid difference must still be paid or handled in the transaction. Depending on the lender and deal, it may be paid in cash or included in new financing. Read the contract to see exactly where the old payoff and trade value appear before signing.

A lender may allow some or all of the shortfall to be financed with a new loan, subject to its approval and loan limits. Adding it increases the amount borrowed and can raise the payment and total interest. Ask for a written breakdown showing the trade value, old payoff, new amount financed, APR, and term.

The increase depends on the shortfall, APR, and new term. As an illustration, financing an extra $3,000 at 7% APR for 60 months adds about $59.40 per month before any related tax or fee changes. The calculator compares a scenario with and without the shortfall; your lender’s approval and contract determine the actual payment.

Paying the shortfall yourself or waiting while you reduce the old balance can lower the amount you need to finance on another car. Whether that is practical depends on your savings, transportation needs, and loan terms. Compare the new loan with and without rolled debt, and avoid judging a trade by monthly payment alone.