Trade-In Equity Calculator
Compare your car’s trade-in offer with your loan payoff to find your equity, see how it changes the loan and payment on your next car, what trading in saves in sales tax, and when negative equity will turn positive.
How it works
Equity = trade-in offer − loan payoff · Loan-to-value = payoff ÷ trade-in value · Payoff (estimate) = remaining balance after k payments of the original loan · Amount to finance = next price + sales tax + fees − cash down − equity (negative equity adds) · Sales tax = rate × (next price − trade-in credit) · Payment = amount × i ÷ (1 − (1 + i)^−n)
Equity is what your car is worth minus what you still owe on it. Positive equity acts like extra down payment on your next car; negative equity (being "underwater") means the offer will not cover the loan, and dealers usually roll the shortfall into the new loan, so you finance more than the next car costs. If you do not know your payoff, choose "Estimate from my loan" and enter the original amount, term, rate and the payments made so far; the calculator works out the remaining balance. With the next car's price, tax and loan terms it shows how much you will finance, the monthly payment, and the new loan-to-value. In most US states a trade-in also lowers the taxable price of the next car, which is a real saving compared with selling privately; enter a private-sale price under More options to compare the two. If you are underwater, the projection shows when your car's value should catch up with the loan balance if you keep it, based on the yearly depreciation you set. Knowing these numbers before you visit the dealer keeps the gap from being buried in the paperwork.
Worked example
A car with an $18,000 trade-in offer and a $15,000 payoff has $3,000 of positive equity and an 83.3% loan-to-value. Put toward a $32,000 next car with 6% sales tax, the trade-in credit cuts the taxable price to $14,000, saving $1,080 of tax. You finance $32,000 + $840 tax − $3,000 equity = $29,840, which at 7% for 60 months is about $590.87 a month. If you owed $20,000 instead, you would be $2,000 underwater: the loan grows to $34,840 and the payment to about $689.89, roughly $40 a month more than if you paid the $2,000 gap in cash.
Sources: CFPB — Should I trade in my car if it’s not paid off? · FTC — Financing or leasing a car
Frequently asked questions
What is negative equity on a car?
Negative equity, or being "upside down," means you owe more on the loan than the car is worth. It is common early in a loan or after little or no down payment, because cars lose value faster than the balance drops in the first year or two.
Can I trade in a car I still owe money on?
Yes. The dealer pays off your loan and applies any positive equity to the new purchase. If you have negative equity, the shortfall is usually rolled into the new loan — workable, but it means financing more than the new car costs. The calculator shows what that does to your payment and what it would cost to pay the gap in cash instead.
How do I find my loan payoff amount?
Ask your lender for a payoff quote, usually good for 10 days; it includes interest up to the payoff date, so it is a little more than the balance on your statement. If you only know the original loan, choose "Estimate from my loan" to get a close estimate.
Does trading in save sales tax?
In most US states, yes: sales tax on the next car is charged on its price minus the trade-in value. With a $18,000 trade and 6% tax that is $1,080 saved, which narrows the gap between a dealer offer and a higher private-sale price. A few states, including California, tax the full price; switch the option off under More options.
How do I build positive equity faster?
Make a larger down payment, choose a shorter loan term, pay extra toward principal, and pick a model that holds value. These keep the balance ahead of the car’s depreciation. If you are underwater now, keeping the car longer is often the cheapest fix; the projection shows roughly when you will reach break-even.
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Educational estimate only — real costs vary by lender, insurer, location and driving habits. Not financial advice.