Ownership & Finance Calculators
Work out the real monthly cost of a car — loan payments, depreciation, insurance, and what it’s actually worth against what you still owe.
Two numbers decide most of what a car actually costs you, and neither one is the sticker price: how fast it loses value, and how much of your payment is going toward that loss versus the loan itself.
Why New Cars Go Underwater Fast
A new car commonly loses 20-30% of its value in the first year alone, while a loan’s early payments go mostly toward interest rather than principal. Stretch the loan to 72 or 84 months and the balance falls even slower relative to the car’s value, which is why long terms are the biggest driver of negative equity — not depreciation by itself.
Once the loan balance exceeds what the car is actually worth, you’re underwater: selling or trading in means covering the gap out of pocket or rolling it into the next loan, which starts the new loan underwater too.
The Real Monthly Cost Beyond the Payment
The loan payment is only part of what a car costs each month. Insurance, fuel, maintenance, registration, and the car’s own depreciation all add to it, and together they’re a better number for comparing two different vehicles than the payment alone. Dividing total annual ownership cost by miles driven gives a cost-per-mile figure, which is the cleanest way to compare a cheap-to-buy gas guzzler against a pricier, more efficient option.
Frequently Asked Questions
Why does a longer loan term increase my risk of being underwater?
A longer term lowers the monthly payment but slows how fast the balance drops, while the car keeps depreciating on its own schedule. The loan balance and the car’s value fall apart at different rates, and the gap between them is what negative equity is.
What happens if I roll negative equity into a new car loan?
The shortfall gets added to the new loan amount, so you start the new loan already owing more than the new car is worth. It also means paying interest on debt from a car you no longer own.
Is cost per mile a better comparison than sticker price?
For comparing two different vehicles, yes. It accounts for depreciation, fuel, insurance, and maintenance together, rather than just the purchase price, which only reflects what you pay upfront.