- The exchange of property as part of a down payment when opting to buy another property. Other properties and vehicles are commonly used in trade equity as partial down payment.
collateral cash, bartered equity, trade assets
Related Terms and Acronyms
- Boot — Definition,
- Cash or other property used in an exchange to make the values of property traded equal. For instance, if you trade in a delivery truck on a new model, the cash you pay in addition to your old truck is boot.
- Down Payment — Definition,
- The portion of the purchase price a buyer pays, in cash, at the time the loan originates.
- Exchange — Definition,
- A trade of property for other property or services. Like-kind property exchanges are a popular tax-deferral strategy.
- Negative-equity Financing — Definition,
- Financing for new car buyers who owe more on their trade-in than the car is worth.
- Swap — Definition,
- An agreement between two businesses to exchange commodities, payments or other financial products to reduce the risk of volatile market conditions or to obtain a better price or rate. For example, interest rate swaps, where floating rate interest is exchanged for fixed rate interest, protects a corporation against rises in rates or allows it to take advantage of a better rate. A cross-currency swap enables two parties to enter into an agreement in which one exchanges its currency for the other's to meet their separate requirements.
- Sweat Equity — Definition,
- The value of the work put into a house by its owner. This can be used in place of a full down payment. Up to and including 50% of a down payment.