1. What is an Auto Loan With Negative Equity?

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 standard auto loan formula:

Where:

• \( loan\_amount \) — Vehicle price + negative equity - down payment + fees
• \( r \) — Monthly interest rate (annual rate ÷ 12)
• \( n \) — Loan term in months

Explanation: The formula calculates the fixed monthly payment required to fully amortize the loan over its term.

3. Understanding Negative Equity

Details: Rolling negative equity into a new loan increases your total debt and monthly payments. It's important to understand the long-term financial impact before proceeding.

4. Using the Calculator

Tips: Enter all amounts in USD. Be sure to include all fees (taxes, title, registration) in the fees field. The negative equity amount should be the difference between what you owe and your trade-in value.

5. Frequently Asked Questions (FAQ)

Q1: Is rolling negative equity a good idea?
A: It can be necessary but increases your debt. Consider paying down the negative equity separately if possible.

Q2: How does negative equity affect my loan?
A: It increases your loan amount, monthly payment, and total interest paid over the life of the loan.

Q3: What's a typical auto loan interest rate?
A: Rates vary by credit score, but typically range from 3% (excellent credit) to 15%+ (poor credit).

Q4: How can I reduce my monthly payment?
A: Increase your down payment, choose a longer loan term, or negotiate a lower interest rate.

Q5: Does this include GAP insurance?
A: No, GAP insurance would be an additional cost to consider when rolling negative equity.