Calculator Methodology

Car Finance Garage compares financing choices with a net-cost model. Net cost combines vehicle purchase cost, loan interest, tax cost, and investment growth that is kept or forgone during the comparison window. Lower modeled net cost means the scenario leaves more value available after accounting for those tradeoffs.

Loan and investment calculations

Auto loan payments use the standard fixed-rate amortization formula. Market growth is compounded over the selected term for money that remains invested. For 401(k) loan scenarios, the calculator models growth on the repayment stream rather than pretending the borrowed balance stayed fully invested.

Tax and ownership costs

Investment liquidation estimates capital gains tax from the sale amount, cost basis percentage, and tax rate entered by the user. Five-year ownership cost adds fuel or electricity, maintenance, insurance, property tax, registration, and tires so users can compare vehicles as well as financing methods.

Limitations

Results are estimates. The model does not know a user's exact tax records, employer plan terms, lender fees, prepayment rules, insurance quotes, or future market returns. Users should verify important assumptions with lenders, plan administrators, tax professionals, and legal advisors before making a purchase decision.