1. What is Negative Equity in Car Financing?

Negative equity occurs when you owe more on your current car loan than the car is worth. This calculator helps determine your new monthly payment when rolling negative equity into a new car loan.

2. How the Calculator Works

The calculator uses the standard auto loan formula adjusted for negative equity:

Where:

• \( loan\_amount \) — Vehicle price + negative equity - down payment + fees
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment required to fully amortize the loan over its term.

3. Understanding Your Results

Details: The calculator shows your monthly payment, total loan amount (including rolled-in negative equity), total interest paid, and overall cost of the loan.

4. Using the Calculator

Tips: Enter all required fields accurately. For best results, know your exact negative equity amount from your current loan payoff quote.

5. Frequently Asked Questions (FAQ)

Q1: What exactly is negative equity?
A: Negative equity is the difference between what you owe on your current car loan and what the car is actually worth.

Q2: How does negative equity affect my new loan?
A: It increases your loan amount, which raises your monthly payments and total interest paid.

Q3: Is rolling negative equity a good idea?
A: Generally not ideal, as it increases your debt. Consider alternatives like paying down the difference first.

Q4: What's a typical auto loan term?
A: Most loans are 36-72 months, though some lenders offer up to 84 or 96 months (longer terms mean more interest).

Q5: How can I reduce my monthly payment?
A: Increase your down payment, negotiate a lower price, or choose a longer loan term (though this increases total interest).