Negative-Equity Trade-In / Keep-or-Trade Calculator
How much old debt would you roll into a replacement car, and what payment and interest would it add? Start with the trade transaction, then optionally compare keeping your current car over the same ownership period.
Your trade-in transaction
Use an actual trade offer and a dated lender payoff quote. Gray examples are hints only. Personal amounts start empty.
What the trade would finance
Current equity or shortage
Old debt rolled into new loan
Total amount financed
Estimated replacement monthly payment
Added monthly payment from old debt
Total loan-term interest on rolled old debt
Cash is allocated to the old-debt shortage first for this explanation. Credits reduce the purchase portion first; any excess credits reduce the remaining old debt. Allocations sum to the actual loan. Rollover interest is already part of total loan interest, not an additional charge.
Keep or trade over the same horizon
| Cost component | Keep this car | Trade |
|---|---|---|
| Upfront cash (keep includes immediate repair) | ||
| Loan payments through horizon | ||
| Operating costs through horizon | ||
| Total cash outflow | ||
| Remaining debt | ||
| Entered estimated resale value | ||
| Ending vehicle equity | ||
| Modeled economic cost |
Transaction reconciliation
- Itemized taxes, fees and add-ons
- Net transaction before cash
- Cash actually used
- Unused offered cash retained
- Transaction surplus returned to you
- Net upfront cash (negative = cash received)
- Cash covering old debt first
- Old-debt shortage after cash, before excess credits
- Excess purchase credits covering old debt
- Replacement purchase portion financed
- Total replacement loan interest
Loan schedules
Replacement loan — full term
| Month | Beginning debt | Interest | Payment | Principal reduction | Ending debt |
|---|
Current loan — comparison horizon
| Month | Beginning debt | Interest | Payment | Principal reduction | Ending debt |
|---|
How the calculation works
Trade equity = actual offer − lender payoff quote. Negative equity = max(payoff − offer, 0). Net transaction = replacement price + entered taxes, fees and add-ons + payoff − offer − applicable credits. Financing = max(net transaction − offered cash, 0). Cash used never exceeds a positive transaction requirement; unused cash stays yours. If equity and credits exceed the purchase requirement, the transaction surplus is shown as cash returned, not a negative loan.
Cash is assigned to the old shortage first. The rolled portion is capped to the actual loan after credits. Its payment and loan-term interest use the replacement APR and term. This is an allocation within the loan, not a second loan or a separate payment.
Fixed monthly interest = beginning balance × APR / 1200. Replacement payment = principal × monthly rate ÷ [1 − (1 + monthly rate)^−term]; at 0% it is principal ÷ term. Final payments are adjusted to clear the remaining balance. Lender APR, daily interest, fees and payment conventions may differ; this estimate treats APR as the annual interest rate for monthly amortization.
Same-horizon economic-cost methodology and assumptions
For each option, total cash outflow = upfront net cash + loan payments through the horizon + annual operating costs × horizon / 12. Keeping includes the optional immediate repair upfront. Ending vehicle equity = entered horizon resale value − remaining debt. Modeled economic cost = total cash outflow − ending equity. Both options start with you owning the same current car and debt: that starting position cancels. Existing equity enters the trade transaction once and stays in the kept car once.
Do not add depreciation or loan interest again: principal and interest are already in payments, while resale value and remaining debt determine ending equity. Payoff quote and statement principal can differ because of accrued interest or other charges; keep them distinct and current. Keep-loan payments stop at payoff; if payments do not cover interest, the warning explains that the balance stays flat or grows. A horizon before payoff retains that debt.
Resale values and costs are uncertain user estimates, not predictions. Zero/negative modeled cost can reflect retained equity or proceeds; it does not guarantee profit. No cash investment returns, discounting, taxes after purchase, selling fees, loan approval, refinancing, changing annual costs or extra payments are modeled. Schedules are capped at 120 replacement months and 600 comparison months. No dates are assumed.
Assumptions and limitations
A dealer’s promise to pay off your old loan does not necessarily erase negative equity. Confirm where the payoff, cash and credits appear in the written contract. A payoff quote is dated and can differ from your statement’s principal. Enter valid, applicable rebates only once; enter taxes already adjusted under your jurisdiction’s rules. This tool does not calculate a nationwide tax treatment.
Longer terms can lower payments while increasing interest and the time spent owing more than a car is worth. Lower monthly payments do not automatically mean lower ownership cost. Compare the same horizon and realistic resale estimates. No lender approval, debt forgiveness or savings is promised.
Read the FTC guide to auto trade-ins and negative equity and CFPB guidance on trading a car before it is paid off.