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

In Ontario, rolling negative equity into a new car loan means that the outstanding balance on your trade-in vehicle, which exceeds its current market value, is added directly to the principal amount of your new vehicle financing. This practice, while common across Canada, significantly inflates your new loan's total amount, leading to higher monthly payments, a potentially longer loan term, and substantially more interest paid over the life of the loan. For consumers, this matters immensely because you are effectively financing a debt from a previous depreciating asset on top of your new vehicle, creating a challenging financial cycle. Especially in the current 2025 market with elevated interest rates and vehicle prices, this can make it much harder to build equity in your new car and increases your overall financial burden. It's crucial to understand this mechanism and consider alternatives like paying down the shortfall upfront or exploring private sale options for your trade-in before committing to such a loan structure.

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