negative equity
"Negative equity" commonly occurs in real estate and vehicle financing when the value of the asset falls below the outstanding loan amount.
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Definition
C1Real Estate
(financial)When the market value of a property is less than the remaining balance on the mortgage.
Example
- The homeowner faced negative equity after the housing market declined, leaving the property worth less than the mortgage.
C1Vehicle Financing
(financial)When the value of a vehicle is less than the outstanding amount on the car loan.
Example
- Rapid depreciation led to negative equity on the car loan, making it difficult to sell the vehicle.
C2Corporate Finance
(financial, technical)When a company's liabilities exceed its assets, often indicating financial distress.
Example
- The company reported negative equity, raising concerns about its solvency.
Similar
Terms that have similar or relatively close meanings to "negative equity":