Negative Equity Auto Loan Calculator

1. Enter the new vehicle price, trade-in offer, loan payoff balance on current car, new loan apr and new loan term.
2. Optionally add cash down payment, sales tax rate and title, registration & dealer fees — leave blank to skip.
3. Read the highlighted result first, then the breakdown below it. Load the worked example to check the math by hand.

Negative equity is the shortfall between what you still owe and what the trade-in is worth. When it is rolled into the new loan it becomes part of the amount financed and is amortized at the new APR just like the car itself.

• Negative equity = payoff balance − trade-in offer (0 if the trade covers the payoff)
• Sales tax = (price − trade-in offer) × tax rate
• Amount financed = price + tax + fees − down payment − trade-in offer + payoff balance
• Monthly payment = standard amortized payment on the amount financed
• Cost of rolling over = payment and interest with the negative equity − the same loan without it
• Loan-to-value = amount financed ÷ vehicle price

A $30,000 car with $2,000 down, 6% tax and $500 of fees. The dealer offers $12,000 for a trade that still has a $15,000 payoff. The new loan is 7% APR for 72 months.

1. 1Negative equity = $15,000 − $12,000 = $3,000.
2. 2Sales tax = ($30,000 − $12,000) × 6% = $1,080.
3. 3Amount financed = $30,000 + $1,080 + $500 − $2,000 − $12,000 + $15,000 = $32,580.
4. 4At 7% for 72 months the payment is about $555.45. Without the $3,000 rollover it would be about $504.30 — roughly $51 a month more.
5. 5Loan-to-value = $32,580 ÷ $30,000 = 108.6%, so the new loan starts underwater.

What is negative equity on a car?

It is the amount by which your loan payoff exceeds the car's trade-in or market value. If you owe $15,000 and the car is worth $12,000, you have $3,000 of negative equity.

Is rolling negative equity into a new loan a bad idea?

It is expensive rather than forbidden. You pay interest on money that bought nothing new, and the new loan starts owing more than the car is worth, which makes the next trade harder. Paying the gap in cash, waiting, or buying a cheaper car all shrink the problem.

Why does the loan-to-value matter?

Lenders cap how much they will lend relative to the car's value. A high loan-to-value can mean a higher rate, a required down payment, or a declined application, and it raises the value of gap insurance.

Does a longer term fix negative equity?

It lowers the monthly payment but usually makes things worse: you pay more interest and the balance falls more slowly than the car depreciates, so you stay underwater longer.

How is sales tax handled on a trade-in?

This calculator applies tax to the price after the trade-in credit, which is how many states work. Some states tax the full price; if yours does, enter a slightly higher tax rate or add the difference to fees.

How do I get out of negative equity?

Pay extra toward principal on the current loan, keep the car longer, sell privately for more than the trade offer, or cover the gap with cash at trade-in. The Extra Payment Payoff Calculator shows how quickly extra principal closes the gap.