Vehicle EconomicsDown Payment Needed to Eliminate Negative Equity
The cash that prevents your old loan gap from riding along on a new deal.
Why this comes up
Once you know you're underwater, the next real question is how much cash actually makes the gap disappear rather than just riding along into a new loan. That number is different from the general "negative equity" figure because it accounts for transaction costs on top of the raw payoff-versus-offer gap.
How we calculated this
Required cash equals the trade payoff plus transaction costs minus the trade offer, floored at zero. If you have less cash available than that, the shortfall is what would still roll into the new loan.
Worked example, using this page's own defaults ($20,000 payoff, $16,000 offer, $200 transaction costs): the required cash is $4,200. Run the calculator above with your own trade numbers.
What this means
- Paying this gap in cash avoids financing old debt at the new deal's rate, but it uses liquidity you could otherwise deploy elsewhere, this isn't automatically the right move.
- If the cash isn't available now, Trade Now vs Wait 6 Months compares waiting for the gap to shrink against trading today with a rollover.
- A higher trade offer shrinks the required cash directly, it's worth shopping the trade before assuming you need to write a check.
Limitations
This is not a claim that paying cash beats waiting or targeting a lower payment instead, compare against those options too. See Methodology.
Methodology
This engine is built on Vehicle Economics' equity and depreciation projection model: your value and loan payoff projected forward from your own depreciation figure until they cross. See Methodology for the full detail.