Compare your lender settlement figure with a realistic current vehicle value.
Equity = current vehicle value − current settlement figure.
A positive number indicates value above settlement. A negative number indicates settlement above value. The quality of the result depends on using a current lender figure and a realistic vehicle value.
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The calculation is deliberately simple: current vehicle value minus current lender settlement figure. Use numbers obtained at roughly the same time. A dealer part-exchange valuation is not the same as a retail asking price, and an old settlement quotation may no longer be valid.
Positive equity means the value entered is higher than settlement. Negative equity means settlement is higher. Neither result tells you what you should do; it is simply one number to use when comparing settlement, sale, part-exchange or continuing the agreement.
It does not estimate selling fees, dealer margin, future depreciation, settlement rebates, damage, arrears or a lender’s acceptance of a transaction. Confirm the settlement quotation directly with the finance provider before acting.
Read the negative-equity guide or learn about positive equity and part-exchange.