1. What is the Car Payment Calculator With Negative Equity?

This calculator helps determine your monthly car payment when rolling negative equity from a previous vehicle into a new loan. Negative equity occurs when you owe more on your trade-in than its current value.

2. How Does the Calculator Work?

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

Where:

• \( loan\_amount \) — Amount financed for the new vehicle (USD)
• \( negative\_equity \) — Amount owed above trade-in value (USD)
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment required to fully amortize the combined loan amount (new vehicle plus negative equity) over the specified term.

3. Importance of Calculating Payments With Negative Equity

Details: Understanding how negative equity affects your payment helps in financial planning and deciding whether to roll over negative equity or pay it separately.

4. Using the Calculator

Tips: Enter the new car loan amount, negative equity amount, annual interest rate, and loan term in months. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What exactly is negative equity?
A: Negative equity is the difference between what you owe on your current vehicle and its actual trade-in value.

Q2: Is rolling negative equity into a new loan a good idea?
A: It increases your new loan amount and monthly payments. Consider paying it off separately if possible.

Q3: How does negative equity affect my interest costs?
A: It increases your principal balance, resulting in more total interest paid over the life of the loan.

Q4: Can I finance negative equity with any car loan?
A: Most lenders allow it, but there may be limits (typically 125-150% of the new car's value).

Q5: Are there alternatives to rolling over negative equity?
A: Yes, you can pay the difference out of pocket, keep your current car longer, or negotiate a higher trade-in value.