Quick answer: Your usable trade equity is the trade-in value minus the existing lender payout. If the car is worth $20,000 and the payout is $12,000, the trade contributes about $8,000 of positive equity before other transaction adjustments. If the payout is higher than value, you have negative equity, not a deposit.
Questions borrowers commonly ask
- I still owe money on my trade — how much of the trade value actually becomes the new deposit?
- I need to privately sell my current car for $20k to fund the new-car deposit — what order should I do it in?
- My trade value is $6k but I owe $12k — how does the next finance work?
Use the equity equation
Trade value minus current payout equals positive or negative equity.
Positive equity reduces the new finance
That equity can operate like a deposit/changeover contribution.
Negative equity increases the amount to be resolved
Either contribute cash or use a lender-approved structure that can accommodate a limited shortfall.
Negotiate new-car price and trade separately
A high trade number can be offset by a worse new-car price. Compare the overall changeover, not the headline trade.
General information only. Approval, pricing, fees, income treatment and vehicle eligibility depend on the lender, borrower circumstances and contract.
Frequently asked questions
Does the whole trade value count as deposit?
Only if there is no finance owing.
What if I owe more than trade value?
That is negative equity.
Can I add cash as well?
Yes.
Should I sell privately instead?
It may produce more value but adds settlement/timing complexity.
Can negative equity be rolled into the next loan?
Sometimes, subject to lender policy and vehicle value.
Sources and verification
Related GPS Finance resources
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