Auto Loan
The car loan, the depreciation curve, and the years you spend underwater.
Monthly payment vs. depreciation — see when the balance falls below resale value.
Built and reviewed by LeadAfrik Research
Data-grounded analysis on African economies
Inputs
The deal
Verdict
$ 487 / month
Loan stays at or below resale value across the term.
Total interest over the term: $ 5.2K. Total cost of the car: $ 35.2K (purchase + interest, before fuel, insurance, maintenance).
Result
The numbers
Amount financed
$ 24.0K
Monthly payment
$ 487
Total interest
$ 5.2K
Total cost (price + interest)
$ 35.2K
Value at end of term
$ 12.8K
Equity at end of term
$ 12.8K
Trajectory
Loan balance vs vehicle value
Where the navy line sits above the gold line, you owe more than the car is worth — that's the underwater window.
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Common questions
What APR is reasonable on an auto loan?
Highly dependent on credit score, vehicle age, and country. In the US in 2025, prime borrowers see 6-8% on new cars and 8-12% on used; subprime can hit 18%+. In Kenya, dealer-financed loans often run 14-18%. The calculator above lets you sweep the rate to see how much it actually costs you over the term.
Why does the depreciation matter?
A new car loses 20-25% of its value in year one and roughly 50% by year five. If your loan amortises slower than the depreciation curve, you spend years 'underwater' — the loan exceeds the car's resale value. Selling early in that window means writing a cheque to the lender. The chart shows where the curves cross.
Should I put more money down?
More down means less financed, less interest, and crossing the underwater zone faster. Conventional rule: 20% down on new, 10% on used. Below those, plan to keep the car longer — at least until the loan balance falls below the resale value.
Lease vs buy?
Lease has lower monthly payments but you build no equity and face mileage limits + wear-and-tear charges. Buy means higher monthly but resale value at the end. Over 8+ years of ownership, buying almost always wins on total cost. Over 3 years and you want a new car every cycle, lease can be cheaper.