Auto Loan Calculator With Negative Equity

Auto Loan Formula:

\[ P = \text{price} + \text{tax} + \text{fees} - D - \text{trade\_value} + \text{owed\_on\_trade} \] \[ PMT = P \times \frac{r (1 + r)^n}{(1 + r)^n - 1} \]

Vehicle Price:

Tax:

Fees:

Down Payment (D):

Trade-in Value:

Amount Owed on Trade:

Interest Rate (r):

decimal

Loan Term (n):

months

Monthly Payment (PMT):

Unit Converter ▲

Unit Converter ▼

From:	To:

1. What is Negative Equity in Auto Loans?

Negative equity occurs when you owe more on your current vehicle than it's worth. This calculator helps determine your monthly payment when rolling negative equity into a new auto loan.

2. How Does the Calculator Work?

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

\[ P = \text{price} + \text{tax} + \text{fees} - D - \text{trade\_value} + \text{owed\_on\_trade} \] \[ PMT = P \times \frac{r (1 + r)^n}{(1 + r)^n - 1} \]

Where:

\( P \) — Adjusted principal amount
\( PMT \) — Monthly payment
\( r \) — Monthly interest rate (annual rate ÷ 12)
\( n \) — Loan term in months

3. Understanding the Calculation

Details: The calculation first determines the net amount being financed after accounting for all credits (down payment, trade-in value) and debits (taxes, fees, negative equity). Then it calculates the monthly payment based on this adjusted principal.

4. Using the Calculator

Tips: Enter all monetary values in dollars without commas. Interest rate should be entered as a decimal (e.g., 0.05 for 5%). Loan term is in months (e.g., 60 for 5 years).

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 what it's actually worth when trading it in.

Q2: Is rolling negative equity into a new loan a good idea?
A: It can lead to higher monthly payments and being "upside down" on your new loan. Consider paying off the difference separately if possible.

Q3: How does negative equity affect my loan?
A: It increases the amount you need to borrow, resulting in higher monthly payments or a longer loan term.

Q4: Can I avoid negative equity?
A: You can minimize it by making larger down payments, choosing shorter loan terms, or keeping your vehicle longer.

Q5: Does this calculator account for taxes and fees?
A: Yes, it includes separate fields for taxes and fees which are added to the total amount financed.