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

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

In YT, rolling in negative equity means the outstanding balance on your current car loan, which exceeds your vehicle's trade-in value, is added directly to the principal of your new loan. This significantly inflates the new loan amount, resulting in higher monthly payments, a longer repayment term, and ultimately, paying substantially more in total interest over the life of the loan. Given current (2025) market conditions, which may feature elevated interest rates and fluctuating used car values across Canada, this practice can exacerbate the financial burden, as you are paying interest on a depreciating asset that you no longer own. For consumers in Yukon, this matters deeply because it places you 'underwater' on your new vehicle from the moment you drive it off the lot, making it challenging to sell or trade in the future without incurring further debt. It can perpetuate a cycle of negative equity, trapping borrowers in a continuous state of owing more than their vehicle is worth. Therefore, it is prudent to explore options like paying down the shortfall separately, choosing a less expensive new vehicle, or negotiating a better trade-in value to mitigate the long-term financial implications and maintain better financial health.

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