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In MB, what should I know about negative equity roll-in for car loans?
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Car Loan Glossary • mb

In MB, what should I know about negative equity roll-in for car loans?

In Manitoba, rolling negative equity into a new car loan means the outstanding balance from your previous vehicle, which you still owe after its trade-in value is applied, is added to the principal of your new car loan. This significantly inflates the total amount you are financing, leading to higher monthly payments and a greater total interest paid over the loan's term. In the current and projected 2025 market, characterized by potentially fluctuating interest rates and used car values, consumers in MB are particularly susceptible to the compounding effects of negative equity. This matters because it puts you at a higher risk of being "upside down" on your new vehicle sooner, meaning you owe more than the car is worth, which can complicate future trade-ins or sales. While Manitoba does not have unique provincial regulations prohibiting negative equity roll-in, lenders will stringently assess your overall debt-to-income ratio and creditworthiness, potentially making it harder to secure favourable terms or even qualify for the loan. It is always advisable to pay down the shortfall before financing, if possible, or explore options like selling your current vehicle privately to minimize the deficit and avoid this financial trap.

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