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

Rolling negative equity into a new car loan in the Northwest Territories, as across Canada, means the outstanding balance from your previous vehicle's loan, which exceeded its trade-in value, is added directly to the principal of your new car loan. This practice significantly inflates the total amount you are financing, leading to higher monthly payments, a longer loan term, and a substantially increased total interest cost over the life of the new loan.

Given the current (2025) economic climate, marked by elevated interest rates and a generally tighter lending environment, rolling in negative equity makes securing an affordable loan more challenging and amplifies your financial burden. This matters profoundly because you are immediately "upside down" on your new vehicle, financing a depreciating asset plus a debt from a prior asset you no longer own. This can trap you in a cycle of negative equity, making future trade-ins difficult without incurring further debt or a substantial out-of-pocket payment.

Before proceeding, consumers in NT should strongly consider alternatives such as paying down the existing shortfall, selling their current vehicle privately to minimize the deficit, or choosing a less expensive new vehicle to reduce the overall financed amount. While the Northwest Territories does not have a provincial sales tax, which might slightly reduce the *total* amount financed compared to provinces with PST, the core financial implications of rolling in negative equity remain severe and should be approached with extreme caution.