Equity is the difference between the outstanding amount of money you owe to the finance company and the resale value of the vehicle. You have positive equity if the market value of the vehicle is greater than the amount you owe. You have negative equity if the amount of money you owe is greater than the market value of the vehicle.
Example of positive equity:
Amount of money owed = £10,000
Resale value of vehicle = £12,000
Equity = £2,000
Example of negative equity:
Amount of money owed = £10,000
Resale value of vehicle = £9,000
Negative Equity = -£1,000