How a trade-in affects your car payment

A trade-in can change your loan in two ways: the equity reduces what you borrow, and in some places the trade value also reduces the taxable price. This calculator shows both effects separately.

Formula

Trade equity = Trade-in value − Loan payoff

Taxable price = Price − Trade-in value (if the credit applies) or Price (if not)

Amount financed = Price + Sales tax + Fees − Positive equity + Negative equity − Cash down

Worked example

A $34,000 car, a $14,000 trade with $8,000 still owed, $2,000 down, 6.5% tax and $800 in fees gives $6,000 of trade equity. With the tax credit, about $28,100 is financed — around $556/month at 7% for 60 months. Without the credit, tax rises to about $2,210 and the payment to roughly $574.

What the result means

Positive equity behaves like cash down. Negative equity does the opposite: you pay interest on debt from your previous car. If the result shows negative equity, the negative equity car payment calculator examines it in more detail.

Assumptions and limitations

• Trade-in tax treatment is jurisdiction-dependent. Use the toggle to match your local rule and confirm it before signing.
• The trade value is your estimate; the dealer's appraisal may differ. A payoff quote from your lender includes per-day interest.
• Rebates, add-ons and taxable dealer fees are not modeled — see the calculator with tax and fees to split fees.

For a simpler estimate use the main car payment calculator, or check whether the payment fits your budget with the affordability calculator.