If you owe more on your trade-in vehicle than it is worth, you have “negative equity,” or are “upside-down.” Sometimes a dealer will tell you your trade is worth one value, but put a higher value on the contract, and raise the vehicle price at the same time. This is called “over-allowing.” Dealers over-allow on trade-in vehicles to keep the bank from finding out that you owe more on your trade than it is worth. It is illegal because you end up paying more taxes and registration fees than you should.