1. What Is Negative Equity in Car Leasing?

Negative equity occurs when you owe more on your current car loan than the car is worth. This calculator helps determine your new lease payment when rolling negative equity into a new lease.

2. How the Calculator Works

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

Where:

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

3. Understanding the Formula

Explanation: The formula calculates the fixed monthly payment needed to pay off the total loan amount (including negative equity) over the lease term at the given interest rate.

4. Using the Calculator

Tips: Enter all dollar amounts in USD. Interest rate should be the annual percentage rate (APR). The calculator assumes a standard lease structure with negative equity rolled in.

5. Frequently Asked Questions (FAQ)

Q1: Is rolling negative equity into a lease a good idea?
A: It's generally not recommended as it increases your monthly payments and total cost, but sometimes necessary.

Q2: How does negative equity affect my lease?
A: It increases your capitalized cost, resulting in higher monthly payments throughout your lease term.

Q3: What's the maximum negative equity I can roll into a lease?
A: This varies by lender but typically 10-20% of the new car's value.

Q4: Are there alternatives to rolling negative equity?
A: Yes, including paying the difference out of pocket or keeping your current vehicle until equity improves.

Q5: Does this calculator account for residual value?
A: No, this simplified version focuses on the payment impact of negative equity.