The car loan, the depreciation curve, and the years you spend underwater.
Vehicle price, down payment, APR, term. We compute the monthly payment and overlay it on the depreciation path, so you can see exactly when (or whether) the loan balance falls below the car's resale value.
Built and reviewed by Stephen Omukoko Okoth
Mathematical Economist · ex-Morgan Stanley FI · Equilar
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.
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.