How it works
Negative equity: a worked offer comparison
With a $12,000 dated payoff, dealer offers of $10,000, $10,500 and $11,000, and $100 selling fees per dealer offer, net proceeds are -$2,100, -$1,600 and -$1,100. An assumed $13,000 private sale with $500 fees leaves $500. Its $1,600 advantage over the highest dealer net proceeds excludes tax effects, time and sale risk. These are hypothetical amounts.
Request a payoff valid for the expected settlement date. A shortfall must be settled with cash or another agreed arrangement; adding it to replacement financing increases the amount borrowed. See CFPB guidance on trading a car with an unpaid loan (checked 22 October 2026). Compare trade-in and private-sale handoff steps, then test a replacement loan in the loan calculator and its ownership budget.
The valuation underneath is illustrative. It starts with an 18% decline in the first year and 12% in each year after, and at age zero it keeps the starting MSRP. It treats 12,000 miles a year as expected, with an adjustment of 0.0002% per mile above or below that and a cap of ±20%. Kilometers are converted first.
Good condition and base trim both have a 1.00 multiplier. Excellent, fair and poor condition use 1.05, 0.85 and 0.65, and mid and premium trim use 1.05 and 1.10. The trade midpoint is 85% of the private midpoint. Every coefficient here is a modeling choice, not a measured dealer discount or a licensed valuation.
The formula behind the estimate
Every result starts with a defined model and visible assumptions.
Private midpoint = age-depreciated original base MSRP × mileage × condition × trim adjustments Trade midpoint = private midpoint × 0.85 Trade scenario band = midpoint × [0.85, 1.15] Net trade equity = estimated trade value − current loan payoff
A worked example
For a five-year-old car with a $30,000 original base MSRP, 60,000 miles, good condition and base trim, the modeled trade midpoint is about $12,540. With an $8,000 payoff, midpoint equity is about $4,540. If a real dealer offers $11,000, that real offer replaces the modeled amount in your purchase budget.
Is the trade allowance the whole story?
No, it's one line in the deal. A generous-looking allowance can be offset by a higher price on the new car, added products or worse financing. Compare complete written deals on the same car and the same assumptions. Write down the price before trade, taxes and fees, the trade allowance, the payoff, cash down, amount financed, rate and term. Talking only about the monthly payment hides those tradeoffs.
The range shown is ±15% around a generic midpoint. It doesn't mean a dealer will buy within that band. Reconditioning needs, title history, local inventory, demand and the specific model can matter more than anything here. A dealer's inspection and written offer are evidence this tool doesn't have.
What if I have positive or negative equity?
Positive equity means the offer is more than you owe, which leaves value you can put toward the next car. Negative equity means you owe more than the offer. Rolling that gap into a new loan raises the new principal, but it doesn't make the old debt go away. You can model that directly in the loan calculator.
A private sale may bring in more, but it also takes preparation, advertising, appointments, safe payment and coordination of the lien release. Compare what you'd net and the effort involved, not just the highest price you saw online. Before handing over keys or title, confirm the transfer steps with your lender and your state motor-vehicle agency, and keep proof that the old loan was paid.
What does rolling negative equity into a new loan cost?
Say you owe $14,000 and a dealer offers $11,500 for your trade. That's $2,500 of negative equity. If you buy an $18,000 car with that gap rolled in, you finance $20,500 instead of $18,000. At an illustrative 7% over 60 months, the payment goes from about $356.42 to about $405.92, which is $49.50 more each month. Over the loan you'd pay about $2,970 more in total, which is the $2,500 itself plus roughly $470 of extra interest.
Paying the $2,500 in cash, waiting until you owe less, or selling privately (where you may get a better price) can all beat rolling it in. Check the new loan balance against what the new car could realistically sell for, because a rolled-in balance can leave you owing more than the car is worth.
Questions worth asking
Is this a guaranteed cash offer?
No. There's no dealer network or live offer behind it. It's a planning model that gives you a broad range and a rough idea of equity.
Why is the trade-in value lower than the private-sale value?
The model applies an illustrative 15% reduction for the trade-in channel. That's a scenario, not a fixed margin that every dealer or vehicle follows.
Can a trade-in increase my next loan?
Yes. If your payoff is more than the trade allowance, the difference has to be paid or financed. The loan calculator shows what that does to your payment and interest.
Does the estimate include a tax saving?
No. Tax treatment depends on the transaction and where you live. Enter only a verified allowed credit in the separate sales tax calculator.
What should I use as the payoff amount?
A payoff quote from your lender that's valid for the date you expect to close. A statement balance may not include all accrued interest or charges.
This is general information, not personalized financial advice. Read the limitations.
