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FINANCE

Carry-Over Equity

[Positive equity](/glossary/positive-equity) from a paid-down trade applied as the down payment on the next vehicle.

// Why it matters

Carry-over equity is the dollar value left over after your current loan pay-off is settled from the trade-in value — the surplus carries forward to the next deal as a down payment or cap cost reduction. Example: trade worth $24,000, loan pay-off $18,000 = $6,000 carry-over equity that the dealer applies as your down payment on the new car, no cash out of pocket required. Carry-over equity is the cleanest way to fund a new purchase and the financial mirror image of negative equity. Always verify the dealer's carry-over math against your written pay-off letter and a written Carmax/Carvana offer — dealers occasionally understate trade value or overstate pay-off to capture the gap.

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