18 ms·

What do you mean positive equity?

• qazxcvbnmlp 4y ago
  Loan balance = $15k Vehicle worth = $30k. Eg if they sold the vehicle now, they would come out with money as opposed to the vehicle being worth less than the remaining balance on the loan.
• Pet_Ant 4y ago
  It's when the value of the vehicle is higher than the outstanding loan. So basically, if you sold off your car you could pay off your loan. Because cars immediately depreciate when you take them off the lot and never go to zero. it's an interesting set of curves. The idea is as soon as someone hits positive equity they can trade in that vehicle and use that as a down payment for a newer one. The idea is that you have a larger down payment and now for the same monthly payment can get a nicer model of vehicle. They present this as "free" because it's the same monthly payment. What they don't mention is that in your current vehicle you may be 12 months away from paying off the vehicle and never paying anything for it again, and now you are back to 48 months or whatever your term is. The idea is to never let you off of making payments and seeing car payments as a monthly expenditure like your utilities instead of as a financed purchase like a home. It's about that MRR.