Vehicle Economics

When Will My Car Have Positive Equity?

Solve the month your loan balance is projected to drop below your vehicle's value.

Why this comes up

Almost every new-car loan starts underwater: you owe more than the car is worth the day you drive it off the lot, because depreciation front-loads and the loan balance does not. What most owners actually want to know is not "am I underwater" but "when does that stop being true," because that date changes what your real options are if you need to trade, sell, or refinance. This engine solves for that date directly instead of leaving you to project two numbers by hand every few months.

How we calculated this

Each month, we project two numbers forward: your vehicle's value, using the annual depreciation figure you enter, and your loan balance, using the standard amortization schedule from your APR and term. The month those two lines cross, balance falling to meet or dip below value, is your projected positive-equity date.

Worked example, using this page's own defaults ($19,000 value depreciating $1,800/year, a $22,000 balance at 6% APR over 60 months): the crossover lands at approximatelymonth 17. Run the calculator above to check your own numbers.

What this means

  • A larger down payment or a shorter loan term pulls this date earlier, because the balance falls faster relative to a value that depreciates on its own schedule regardless of how you financed it.
  • If your depreciation estimate is too low, this date is optimistic; if it's too high, the date is pessimistic. Try a higher and lower depreciation figure to see how sensitive your specific crossover is.
  • Reaching positive equity does not mean trading is automatically the right move, it just means you would not need to bring cash or roll debt forward if you did. See Trade Now vs Wait for the fuller decision.
  • A shorter outlook window can legitimately show no crossover even though the loan eventually pays off, if you only care about the next year or two, say so in the outlook field rather than reading a long-run answer as "never."

Limitations

Depreciation here is a straight-line planning estimate you control, not a valuation service or a market forecast. This site does not look up your vehicle's actual current value or a real depreciation curve for that make and model. See Methodology for what the underlying equity-projection model does and does not account for.

Methodology

This engine combines Vehicle Economics' equity and depreciation projection model (your value and loan payoff projected forward from your own depreciation figure until they cross) and break-even search model (a closed-form solve where one exists, otherwise a bounded search over a stated plausible range). See Methodology for the full detail.

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