If you have a trade you will undoubtedly hear the terms positive and negative equity. But what do these terms mean?

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Positive equity is when you owe (for example) $4,000 on your trade and it is actually worth $6,000. This would mean that you have a positive equity in your car of $2,000 that you can use as a down payment on your next car.

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Negative equity is when you owe (for example) $10,000 on your trade but it is actually worth $4,000. This means you have a negative equity of $6,000 that would be added on to the cost of your next car.

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The most accurate way of determining if you have positive or negative equity will be to get your ten day payoff and then have your vehicle appraised by the dealership.

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If you want to get a general idea as to your equity before you go into the dealership, I would suggest you read on another page about trades to better understand that process.