What is negative equity on a car loan?

Negative equity means you owe more than the vehicle is currently worth. This commonly happens with long loan terms high interest rates or vehicles that depreciate quickly.

Can I trade in a car with negative equity?

Yes. The negative equity can be rolled into your new loan. This increases the new financed amount but gets you into a different vehicle. Do this carefully and only when it makes practical sense.

How do I get out of negative equity?

Make extra payments to reduce the balance faster. Refinance at a lower rate if your credit has improved. Or continue making regular payments and the gap naturally closes over 12-24 months as the loan balance decreases.

Negative Equity Car Loan BC

What negative equity means.

What negative equity means.Negative equity — owing more than your vehicle is worth — is common, especially with longer loan terms and higher interest rates. See our BC rate guide for current rate ranges.

How it happens.

If you owe $18,000 on a vehicle worth $12,000, you have $6,000 in negative equity.

Your options in BC.

Your options in BC: keep making payments until the balance falls below the vehicle value (usually 12–24 months), trade in and roll the negative equity into a new loan (increases the new loan amount but gets you into a safer or more reliable vehicle), or refinance at a lower rate to pay down the balance faster.

Rolling negative equity carefully.

Rolling negative equity should only be done when the new vehicle genuinely meets a need — not just for a newer car.

Getting help.

Your advisor can model the exact numbers. If your current vehicle is unreliable and costing you in repairs, rolling $3,000–$5,000 of negative equity into a reliable used vehicle can be the financially sound choice.Avoid extending terms beyond 72 months to absorb the negative equity — the math rarely works out.

More tools to help you.

Estimate monthly payments. Rates by credit tier. What you need to apply. How the process works.