It is not hard for a driver to owe a lender or leasing company more money than the car is worth when it was new. At least until your monthly payments accumulate sufficient equity in the vehicle, a low down payment and a lengthy loan or lease period are sufficient.

Equity must equal the vehicle’s current value when filing claims and valuing it. If the car is damaged, your regular insurance will compensate you based on that value, not the price you paid.