Trade-In & Negative Equity Calculator
Reconcile the replacement deal, old payoff, trade value, tax convention and new financing before accepting a monthly payment.
Your inputs
Use consistent units and periods. Defaults are examples.
Your result
Check the assumptions below before relying on a result.
Formula and method
Trade equity = trade value − old payoff. New funding need = replacement price + entered-convention tax + financed fees + add-ons − cash down − trade equity. Positive funding need becomes principal; a negative amount becomes estimated cash surplus. Compare actual payment/interest against the same deal with negative-equity shortfall removed. Tax uses full vehicle price or max(0, vehicle price − trade value), as explicitly selected.
Worked example
A replacement priced at 30,000, trade worth 15,000, old payoff of 18,000, cash down of 3,000, fees of 500 and 6% tax on the full vehicle price produces 32,300 of new financing: 30,000 + 1,800 + 500 + 18,000 − 15,000 − 3,000. Selecting a trade-value tax credit instead gives 31,400 under that illustrative convention.
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Open calculator ↗How to use this result
- Obtain the current lender payoff amount and an actual trade-in offer.
- Keep the replacement price, add-ons and fees separate.
- Select the tax convention only if it matches your quoted deal; otherwise enter a zero rate and put the actual tax in fees.
- Reconcile the full funding identity, not only the new monthly payment.
- Use the comparison to isolate the incremental payment and interest from including the old shortfall.
Questions about this calculation
Does a dealer paying off the old loan erase negative equity?
The old debt can still be included in the new financing. Inspect the funding reconciliation and contract rather than relying on that phrase.
What happens if trade equity and cash exceed the purchase need?
The model sets the loan to zero and displays the estimated cash surplus. Actual closing allocation can differ.
Is the tax reduction always available?
No. Check the applicable rules and dealer quote. The toggle only illustrates the entered tax convention.