Negative equity car loan calculator

Compare the amount needed to pay off your loan with the value of your vehicle. The tool shows positive or negative equity, the uncovered shortfall after a cash contribution, and the payment and interest for financing that shortfall. It does not appraise the vehicle or supply a trade-in offer. The starting payoff and value come from a CFPB educational example.

Starting inputs use official educational examples. Zero tax, fees, cash contributions, and extra payments mean those items are excluded until you enter them. Replace these assumptions with your own transaction amounts.

Compare a payoff with a usable vehicle value

The payoff field should reflect the amount required to settle the existing loan. The value field should reflect the sale or trade-in amount you want to evaluate. A statement balance and a payoff quote can differ, so confirm which amount applies to your planned transaction. This calculator does not obtain valuations, predict depreciation, or determine how long a quote remains valid.

Read the equity result

Equity equals the vehicle value minus the payoff amount. A positive result means value exceeds the debt in this comparison. A negative result means the debt exceeds value; the calculator displays that difference as negative equity. The CFPB example uses a payoff of $10,000 and a vehicle worth $8,000, leaving a $2,000 difference. That is an educational illustration rather than a description of current used-car values.

Apply cash to the shortfall

A cash contribution reduces the negative equity that remains uncovered. If you enter more cash than the shortfall, the remaining shortfall is zero. Excess cash is not assumed to be an additional down payment on a new car in this tool. If you have positive equity, there is no shortfall to finance here. Use the homepage loan calculator to combine trade-in value, old payoff, purchase price, and down payment in one new-loan calculation.

Measure the cost of carrying the difference

The added monthly payment shows only the cost of financing the remaining shortfall at the entered annual rate and term. It is not the full payment for a replacement vehicle. Total interest is the cost attributable to that shortfall under monthly amortization. Adding that principal to a larger purchase loan at the same rate and term has the same incremental payment in this model. A proposed replacement loan may have different terms, so enter the actual quote rather than assuming this rate is available.

Use loan-to-value carefully

Loan-to-value divides payoff by vehicle value and expresses the result as a percentage. If vehicle value is zero, the ratio is undefined, and the calculator says so. The ratio is a way to describe these inputs, not a rule about loan approval. This site supplies no lender threshold or maximum permitted ratio. Compare multiple vehicle-value figures if you have different written sale or trade offers, and keep the loan payoff consistent while you do that. The result helps explain the difference you must address; it does not guarantee that a new loan will finance it.

Worked example

These values are quoted from CFPB auto loan key terms. The added financing payment is calculated from the APR and term you enter.

How it works

The CFPB negative equity and loan-to-value definitions explain these relationships. Financing the remaining shortfall uses the standard amortization model below.

P is the financed principal, r is the monthly rate, n is the number of monthly payments, and M is the regular payment. Each month, interest equals the previous balance multiplied by r. Principal repaid equals the payment minus that interest. The remaining balance falls by the principal repaid. These steps generate the schedule shown by the tool.

This is the standard fixed-payment amortization model described by CFPB auto loan amortization guidance. We use the entered APR as the annual rate for this estimate. APR can include fees; a contract payment based on a separate note interest rate can differ. Use the contract interest rate in the rate field for a closer payment match when it differs from APR. There are no balloon payments, late fees, missed payments, or daily interest adjustments in this model.