Auto
Auto Loan Calculator
Calculate your monthly car payment, total loan amount financed with sales tax, interest paid, and full vehicle cost using 2026 Federal Reserve benchmarks.
2026 Statutory Rates
Primary Source Verified
Always 100% Free
Negative Equity Car Loan Calculator
Calculate how much negative equity (being underwater) you have in your current vehicle loan, and determine the exact monthly payment and total interest cost of rolling that balance into a new car loan.
Quick Answer: Negative equity—often described as being upside-down or underwater on an auto loan—occurs whenever your outstanding loan balance exceeds the actual market trade-in value of your vehicle. Rolling negative equity into a new car loan increases the total amount financed beyond the new vehicle's purchase price, resulting in higher monthly payments and extra interest charges over the full term. For example, if you owe $22,000 on a vehicle worth $16,500, you have $5,500 in negative equity (an initial loan-to-value ratio of 133.33%). Rolling that $5,500 deficit into a $25,000 new vehicle purchase with $1,000 down payment at 9.00% APR over 60 months increases your monthly payment from $498.20 to $612.37 (+$114.17 per month) and adds $1,350.26 in extra lifetime interest.
Primary Source Verified
Last reviewed: October 2026
Calculation Methodology: Negative Equity Car Loan Calculator
Mathematical Formula
Negative Equity = Loan Balance − Vehicle Value | LTV = (Loan Balance / Vehicle Value) × 100 | Amount Financed (Rolled) = (New Price + Negative Equity) − Down Payment | Amount Financed (Base) = New Price − Down Payment | Monthly Payment = Financed × [r(1+r)^n] / [(1+r)^n − 1]
1. Current Equity Position & LTV: Equity Difference = Current Loan Balance − Vehicle Market Value. If positive, you have negative equity (underwater); if negative, you have positive trade-in equity. The current Loan-to-Value ratio is calculated as LTV = (Current Loan Balance ÷ Vehicle Market Value) × 100.
2. New Loan Amount Financed: When negative equity is rolled into a new vehicle purchase, Amount Financed (Rolled) = (New Vehicle Price + Negative Equity) − Cash Down Payment. If your trade-in has positive equity, that equity functions as an additional down payment: Amount Financed = New Vehicle Price − (Cash Down Payment + Positive Equity). The standalone base comparison loan is Amount Financed (Base) = New Vehicle Price − Cash Down Payment.
3. Monthly Amortization & Payment Delta: Monthly interest rate is r = (APR ÷ 100) ÷ 12 across loan term n in months. Monthly Payment = P × [r(1 + r)n] ÷ [(1 + r)n − 1]. Monthly Payment Delta = Payment (Rolled) − Payment (Base).
4. Total Loan Cost & Extra Lifetime Interest: Total Payments = Monthly Payment × n. Total Interest = Total Payments − Amount Financed. Extra Interest Cost = Total Interest (Rolled) − Total Interest (Base).
How Negative Equity Rollover Works
When trading in an underwater vehicle at a dealership, the dealer agrees to pay off your existing loan balance to clear the title lien. However, the difference between your outstanding payoff balance and the dealer's trade-in valuation does not disappear; rather, that unpaid deficit is added on top of the purchase price of your next car. This means you are borrowing money to pay off the lost depreciation of an asset you no longer own, compounding your debt on the incoming vehicle.
Model Boundaries & Scope Limitations
- Principal & Interest Financing: Calculations model fixed-rate, level-payment amortization for the new loan principal and interest. State sales taxes, dealer documentation fees, registration charges, and gap insurance premiums vary by jurisdiction and dealership and are excluded from the core comparison or entered directly into vehicle purchase price.
- Lender LTV Approval Caps: Lenders set their own maximum loan-to-value underwriting thresholds for rolled negative equity. PlainFig quotes no lender caps or approval guarantees — confirm advance limits directly with your financing institution.
- Vehicle Valuation & Depreciation: Trade-in values and vehicle depreciation schedules depend on condition, mileage, vehicle history, and local auction wholesale markets. PlainFig quotes no proprietary vehicle valuations or depreciation curves—enter your vehicle's actual appraisal or payoff statement figure.
- User-Supplied APR and Down Payment: Interest rates and cash down payments are user inputs. PlainFig quotes no lender pricing or promotional financing programs.
Disclaimer: Informational calculation only. Trade-in rollovers require formal lender credit approval, collateral valuation, and clear lien payoff verification. Does not constitute lending or legal advice.
Verified Worked Example (Benchmark)
Worked Example (Benchmark D — First-Load Defaults):
Inputs: $22,000 balance, $16,500 vehicle value, $25,000 new price, $1,000 down payment, 9.00% APR, 60 months.
Negative Equity: $5,500 (Loan-to-Value: 133.33%).
New Loan Amount Financed: $29,500 ($25,000 price + $5,500 negative equity − $1,000 cash down payment).
Base Loan Amount Financed: $24,000 ($25,000 price − $1,000 down payment).
Monthly Payment: $612.37 (Base loan without rollover: $498.20).
Monthly Payment Increase: +$114.17 per month.
Total Lifetime Interest: $7,242.29 (Base loan interest: $5,892.03).
Extra Interest from Rollover: +$1,350.26 over 5 years.
Primary Statutory Sources & Authorities
- Consumer Financial Protection Bureau (CFPB) — Auto Loans — Federal consumer guidance on vehicle trade-in negative equity, amount financed, and loan-to-value limits.
- Federal Trade Commission (FTC) — Auto Trade-Ins & Financing — FTC guidance on understanding negative equity rollover into replacement auto loans and dealer trade-in practices.
Frequently Asked Questions
Primary source guidance on rules, formulas, and regulations.
Negative equity—commonly known as being "underwater" or "upside-down"—occurs when your outstanding car loan payoff balance is greater than the fair market value of the vehicle. For instance, owing $20,000 on a car worth $15,000 means you have $5,000 of negative equity.
Yes, many auto lenders allow buyers to roll negative equity into a new financing contract, provided the overall loan-to-value (LTV) ratio falls within the lender's maximum underwriting limits. The dealer uses the loan proceeds to pay off your existing lienholder, and the unpaid negative balance is added directly onto the financed amount of your new car.
Rolling negative equity increases both your monthly payment and your total interest expense. Because you are financing a larger balance over the new loan term, you pay interest on your previous car's depreciation in addition to the new car's purchase price. For example, rolling $5,500 of negative equity into a 60-month loan at 9% APR adds $114.17 to your monthly payment and $1,350.26 in extra interest.
Positive equity occurs when your vehicle's market trade-in value is greater than your loan payoff balance. In this scenario, the positive equity acts like a cash down payment: it reduces your new loan's amount financed, lowering your monthly payment and decreasing total lifetime interest charges.
Lenders evaluate your credit profile, debt-to-income ratio, and their own maximum loan-to-value allowance. Limits are set by each lender and vary — check directly with your lender for their specific LTV limits.
Key alternatives include: keeping your current car until you pay down the loan balance and reach positive equity, making accelerated principal payments to erase the deficit faster, selling the vehicle privately to obtain a higher price than trade-in value, or paying the negative equity difference in cash at trade-in rather than financing it. Refinancing the current loan is another path — see our refinance calculator.
Related Auto Financing Calculators
Auto
Car Affordability Calculator
Car affordability calculator: apply the 20/4/10 rule to your income and find the maximum car price, with payment, insurance, and fuel included.