Before you drive it off the lot,
see what you're really paying.
A car payment isn't just a car payment. It's interest on a depreciating asset, delayed wealth-building, and years of your income locked into something that's losing value every day.
Enter your numbers below to see the full picture.
Vehicle Details
Loan Terms
The Alternative: Investing Instead
What if?Instead of making car payments, what if that money went into the market? Set your expected annual return below.
7% is inflation-adjusted — a conservative, realistic estimate.
If invested instead, by age 65
$1.79M
$561/mo for 60 months, then compounded to age 65
Your Loan Summary
You're paying $37,664 for a vehicle that will be worth approximately $14.2K when you finish paying for it — a loss of $23.5K between depreciation and interest.
Cars lose ~15% of value per year. After 5 years, most are worth about half of what you paid.
This payment is 12% of your take-home pay. The 20/4/10 rule recommends keeping total car costs under 10% of gross income. Consider a larger down payment, shorter loan, or less expensive vehicle.
Car Value vs. What You Could Have Built
Your car depreciates while your monthly payment, invested instead, would compound. Same money, very different outcomes.
Investment return rate set above. Car depreciation assumes ~15%/year. This is illustrative, not financial advice.
Cars have never been this expensive to finance
New car prices surged 44% since 2015. But monthly payments jumped even faster — because interest rates nearly doubled. Even as prices eased from their 2022 peak, payments have barely budged.
Growth since 2015 (indexed, 2015 = 100)
Higher = grown more relative to 2015 baseline
Why payments outpaced prices: The Fed raised interest rates from ~3.8% (2021) to ~6.4% (2024). A car that got cheaper from its 2022 peak still costs more to finance each month.
Sources: Kelley Blue Book / Cox Automotive (avg transaction price); Experian State of the Automotive Finance Market (avg monthly payment); U.S. Census Bureau via FRED (median household income). All figures are approximate annual averages. Index: 2015 = 100.
2015 vs. 2024: the same purchase, very different math
What car dealers don't tell you
The auto finance industry profits from your lack of information. Here's what to know.
Monthly payment is a trap
Dealers negotiate monthly payment, not total price. Stretching from 48 to 72 months feels affordable but adds thousands in interest and locks you in while the car loses value.
You're upside-down immediately
A new car loses 15-20% of its value the moment you drive it off the lot. If you financed most of it, you owe more than it's worth for the first year or two.
The 20/4/10 rule
A widely-used guideline: 20% down, loan term no longer than 4 years, and total car costs (payment + insurance) no more than 10% of gross monthly income.
Used cars have better math
A 3-year-old vehicle with 30,000 miles has already absorbed most of its depreciation. You get nearly the same reliability at 50-60% of the new price.
Get pre-approved before you shop
If you need to finance, get pre-approved at your bank or credit union before stepping into a dealership. This gives you negotiating power and often a better rate.
The opportunity cost is enormous
A $700/month car payment invested for 30 years at 7% turns into $850,000. You might buy a dozen cheap used cars in that time and still come out millions ahead.