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

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

In Quebec, rolling negative equity into a new car loan 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 vehicle's financing. This significantly inflates the total amount you are borrowing, leading to higher monthly payments and a substantial increase in the overall interest paid over the life of the new loan, potentially extending the amortization period. Under Quebec's Consumer Protection Act, lenders are required to clearly disclose all components of your loan, so it's imperative to scrutinize the contract to understand exactly how much negative equity is being financed. This practice can perpetuate a cycle of debt, making it harder to build equity in your new vehicle and increasing the risk of being 'upside down' again in the future, especially given current (2025) market conditions where interest rates remain a factor. To mitigate this, consumers should ideally pay down the negative equity separately, explore selling their current vehicle privately to minimize the shortfall, or delay a new purchase until their financial position improves, ensuring they avoid starting a new loan already underwater.

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