1. What is Auto Loan With Negative Equity?

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

2. How Does the Calculator Work?

The calculator uses the auto loan payment formula:

Where:

• \( Loan \) — Amount of the new auto loan
• \( Negative\ Equity \) — Amount owed above vehicle value
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment required to pay off the total loan amount (including negative equity) over the specified term.

3. Importance of Negative Equity Calculation

Details: Understanding the impact of negative equity on your new loan payment is crucial for budgeting and financial planning. It helps you make informed decisions about vehicle purchases and trade-ins.

4. Using the Calculator

Tips: Enter the new 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 occurs when you owe more on your current vehicle loan than the vehicle's current market value.

Q2: How does negative equity affect my new loan?
A: Negative equity increases your total loan amount, resulting in higher monthly payments or a longer loan term.

Q3: Is it advisable to roll negative equity into a new loan?
A: While sometimes necessary, rolling negative equity can lead to being "upside down" on your new loan and should be carefully considered.

Q4: What are alternatives to rolling negative equity?
A: Alternatives include paying off the negative equity upfront, keeping your current vehicle longer, or negotiating with the dealer.

Q5: How can I avoid negative equity in the future?
A: Make larger down payments, choose shorter loan terms, and maintain your vehicle well to preserve its value.