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The point at which somebody trapped in an extended-term car fee scheme breaks even will fluctuate with the depreciation fee, interest rate and length of the loan. Listed here are sample calculations. Notice that a shorter-maturity mortgage pays down way more principle within the first yr, and so purchasers aren’t underwater for long. The cost, of course, is a better month-to-month fee. Right here I assume (unrealistically) that the loan is for 100{cbf34e5eb0b6bd76a455f33fd47a0c18e72cf766be62313d745ebe37fbad3a79} of the automobile value as mirrored in the resale market – no extended service plan rolled in, no downpayment. The variety of permutations with the latter is unwieldy. So if the car is valued at $60,000, then with a $10,000 downpayment (or tradein plus incentives), an eighty four-month, 7.6{cbf34e5eb0b6bd76a455f33fd47a0c18e72cf766be62313d745ebe37fbad3a79} mortgage remains rightside-up throughout but offers $5000 fairness only in the first year, before that $60K has depreciated much, after which again from the 55th month.