Car Leasing Glossary - Negative-equity Financing

Negative-equity Financing (car leasing term)

Financing for new car buyers who owe more on their trade-in than the car is worth. Financial advisors say at least 30 percent of cars traded in have a negative equity balance. For example, if the outstanding balance on a car loan is $14,000, but the trade-in allowance is only $12,000, the loan is "upside-down" by $2,000. New federal regulations that went into effect Oct. 1 make it clearer to consumers through the lease paperwork when they have negative equity. Under the new rules, a space for negative equity appears on the new finance contract and $2,000 would be added to the finance amount of the new auto loan. See also upside-down.

Car Leasing Net Capitalized Cost