Negative Equity Calculator

Negative Equity Calculator – Are You Underwater?

Negative equity on a car loan — also called being "underwater" or "upside down" — occurs when you owe more on your loan than your vehicle is currently worth. This is a common situation, especially in the first 1–3 years of a car loan when depreciation outpaces principal paydown.

What Causes Negative Equity?

• Rapid Depreciation: New cars lose 15–25% of value in the first year.
• Low Down Payment: Financing 100% or rolling in taxes/fees creates immediate negative equity.
• Long Loan Terms: 72–84 month loans pay down principal slowly.
• High Interest Rates: More of each payment goes to interest, not principal.

Options When You Have Negative Equity

• Keep the Car: Continue making payments until equity turns positive.
• Pay Extra: Extra principal payments can eliminate negative equity faster.
• Sell Privately: Private sales yield higher prices than dealer trade-ins, narrowing the gap.
• Roll Into New Loan: Risky — adds the deficit to a new loan, compounding the problem.