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What this calculator does
This calculator exposes the two numbers that trap car buyers: the car payment as a share of take-home income, and negative equity, which is what you owe minus what the car is worth.
The math
Payment percentage = monthly payment ÷ monthly take-home income × 100. Negative equity = loan balance − car value. Break-even months are estimated using the portion of the payment that goes to principal after interest.
Worked example
A $450 payment on $3,000 take-home is 15%. A $22,000 loan on an $18,000 car is $4,000 underwater. The calculator flags both and estimates how long until the loan drops to the car value.
Why this matters
Most people underestimate the cost of small interest and fee decisions. This calculator turns the hidden math into a number you can act on today.
Methodology and transparency
This page publishes the exact formula used to compute the result, so you can verify it in a spreadsheet or check the assumptions against your own situation. The worked example uses the tool default inputs; change any number and the result updates live in your browser. No data is sent or stored.
Common questions
What is the 15% red line?
It is a common rule of thumb: a car payment above 15% of take-home squeezes the rest of the budget and leaves little room for repair or savings.
What is negative equity?
You owe more on the car than it is worth. If you sell or trade it, you still owe the difference, which often gets rolled into the next loan.
Should I trade in a car with negative equity?
Almost never. Rolling the unpaid balance into the next loan just makes the next car more expensive from day one.