Negative Equity Calculator
Being upside down means selling the car would not clear the loan. It is very common early on, and the real danger is not the gap itself - it is rolling it into your next car.
You are upside down by
-
- You owe
- $0
- It is worth
- $0
- Months until the gap closes
- -
- If it were written off tomorrow
- $0
Where the money goes
The green block is it is worth and it stays yours. The orange is you owe and it does not come back.
Move it and watch
-
at {v} for what you still owe
And what you can change
Why your own figure may differ
Month by month
Both numbers move. The balance falls as you pay, and the value falls as the car ages. The gap closes only when the first falls faster than the second.
| After | You owe | It is worth | Gap |
|---|
Negative equity: real examples
Three common situations. Click any card to load it.
- The usual case
Owe $22,000, worth $17,000
Small deposit, long loan, two years in.
You are $5,000 upside down. Selling would leave that much still owed, with no car to show for it.
Load this scenario in the calculator → - Digging out with extra
Adding $200 a month
Same gap, paying extra straight at the balance.
The gap closes far sooner than most people fear. The tool shows exactly how many months it takes.
Load this scenario in the calculator → - Safely the right way up
Owe $8,000, worth $12,000
A decent deposit and a shorter loan.
You have $4,000 of real equity. Selling clears the loan and leaves money towards the next car.
Load this scenario in the calculator →
Common questions about negative equity
What does upside down on a car loan mean?
It means you owe more on the loan than the car is worth. Sell it and the money does not clear the debt, so you have to find the difference from somewhere. It is very common in the first few years, because cars lose value faster than most loans shrink.
How does anyone end up here?
Usually a small deposit and a long loan. A car loses a lot of value early on, while a long loan pays off very little in the same period. If the value falls faster than the balance, you are upside down. A rolled-in balance from a previous car does it too.
What happens if I want to trade it in?
The dealer takes the car and adds what you still owe to your new loan. This is called rolling it over, and it is the trap. You now owe more than the new car is worth on day one, and the problem gets bigger with every car. Some people carry the same debt through three cars.
What if it is written off or stolen?
Your insurer pays what the car was worth, not what you owe. The gap is yours to find, and it is due immediately. That is the exact situation gap cover is sold for. Check whether you already have it before buying it again.
How do I get out of it?
Pay extra straight at the balance, keep the car until the value catches up, or find the difference in cash if you must sell. There is no clever trick. The tool shows how many extra payments it takes, which is usually less frightening than people expect.
How do I avoid it next time?
A bigger deposit and a shorter loan. Those two things do almost all the work. If you cannot afford it on a shorter loan, that is useful information about the car, not about the loan.