Negative Equity Protection

The "Underwater" Detector.

Cars depreciate. Loans amortize. When the car drops faster than the loan, you are trapped. See the gap before you buy.

Vehicle & Loan Details

Adjusts the asset value drop curve.

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Monthly Payment

$0.00

Total Interest Cost

$0.00

Time "Underwater"

0 Months

The "Equity Gap" Chart

Loan Balance
Car Value

Liquidity Check:

Never finance a depreciating asset if it risks your long-term cash flow. Ensure this payment fits your retirement income model.

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What is the "Negative Equity Trap"?

"Negative Equity" (or being underwater) happens when your loan balance is higher than the trade-in value of your vehicle. This is extremely dangerous. If you are in an accident or need to sell the car during this period, you will have to pay the bank thousands of dollars out of pocket just to get out of the loan.

The Danger of Long-Term Loans (72-96 Months)

To get lower monthly payments, many dealerships push 84 or 96-month loans. This flatlines your principal repayment while the car depreciates rapidly.

  • Depreciation Reality: A new car loses ~20% of its value the moment you drive it off the lot.
  • The Gap: If you put $0 down on a 7-year loan, you may be underwater for the first 5 years of ownership.
  • Vector Recommendation: Follow the 20/4/10 rule. Put 20% down, finance for no more than 4 years, and keep costs under 10% of monthly income.

The Rollover Risk:

Never trade in a car with negative equity. Rolling the "old debt" into a "new loan" creates a debt snowball that is mathematically impossible to escape. Use our calculator to ensure you are equity-positive before trading.