Value Calculator
Negative Equity Calculator
Find out whether you're underwater on your auto loan — owing more than the car is worth — and see what it would take to break even.
Your Loan & Car
Check KBB or Edmunds for your car's value.
Your Equity Position
You're underwater by $5,000.
Loan Balance
$24,000
Car Value
$19,000
Loan-to-Value
126%
Months to Break Even
~14
How equity is calculated.
Negative equity is common early in a loan because cars depreciate faster than the balance drops — especially with small down payments or long terms. It resolves as you pay down principal faster than the car loses value. A loan-to-value above 100% means you're underwater; the further above 100%, the deeper the hole.
How drivers end up underwater
The usual culprits are a small (or zero) down payment, a long 72- or 84-month term, and rolling negative equity from a previous car into the new loan. Each one keeps your balance high while the car depreciates on its own schedule — roughly 20% in year one. Buying a fast-depreciating model, or paying over sticker in a hot market, makes the gap worse.
Why rolling it into a new loan is a trap
Dealers will happily "pay off" your old loan and fold the shortfall into the new one. It feels painless, but you're now financing a car you no longer own on top of the new one — often pushing you even further underwater on day one. If you're upside down, the healthiest move is usually to keep the current car and pay the balance down until you have equity again.
How to climb out faster
Make extra principal payments to shrink the balance ahead of schedule, avoid refinancing or extending to a longer term, and simply hold the car — depreciation flattens after the first few years while your payments keep chipping away. Until you're back above water, keep GAP insurance in place so a total loss doesn't leave you paying for a car you no longer have.
Frequently asked questions.
Why am I underwater on my car?
A new car loses ~20% of value in year one, but with a small down payment and a long loan, your balance drops slower than that. The gap is negative equity, and it's most severe in the first 1–3 years.
Can I trade in a car with negative equity?
Yes, but the shortfall gets rolled into your new loan — meaning you finance the old gap on top of the new car. This snowballs debt and is best avoided. Paying down the gap first is smarter.
How do I get out of negative equity faster?
Make extra principal payments, avoid extending or refinancing to a longer term, and keep the car longer so depreciation slows and your balance catches up. GAP insurance protects you if the car is totaled while underwater.
Is it bad to be underwater on my car?
It's not a crisis if you plan to keep the car and make your payments — depreciation slows and your balance catches up over time. It becomes a real problem only if you need to sell or trade early, or if the car is totaled, because you'd owe the difference out of pocket.
Should I get GAP insurance if I'm underwater?
Strongly consider it. If your car is totaled or stolen while you owe more than its value, standard insurance only pays the actual cash value — GAP covers the shortfall. Buy it from your own insurer for $20–40/year rather than the dealer's $500–800 lump sum.
How do I avoid negative equity on my next car?
Put at least 20% down on a new car (10% used), keep the loan term to 48–60 months, avoid rolling old debt into the new loan, and pick a model that holds value well. Those four choices keep your balance at or below the car's value for most of the loan.