Asset Cost (car & house):
The cost to acquire the asset. Equal to the sum of your down payment and the amount you have to borrow. If your math is coming out different, you might want to download a different calculator.
Consumables (monthly) (car & house):
The average monthly cost of the fuel and materials your asset consumes. Gasoline or electricity for a vehicle, utilities for an apartment or home. If you‘re lucky enough to be a homeowner, this also includes water, sewer, & sanitation services. Hmm... is lucky the right word?
Depreciation Rate (car only):
The average percentage of its value your asset loses, annually. In other words, how quickly your asset loses its shine, financially speaking. Depends greatly on the type of asset, its quality, and how frequently you use it. An automobile will steadily lose value no matter what, whereas a work of fine art, like a financially savvy mind, only gets better with age.
Down Payment (car & house):
The amount of cash you pay directly to the seller. Typically comes from savings, investments, and/or a paper bag sewn into your late grandmother‘s mattress.
End-of-life Value (car only):
The amount your asset will be worth when you sell it. Try thinking of this as "end of ownership", since most assets are transferable in any condition. Remember, one person‘s trash is another person‘s not-quite trash.
Insurance (monthly) (car & house):
The monthly cost of insuring your car, home or other asset. WW estimates this value using industry-averages. If the asset is covered under your homeowners or renter‘s insurance, set this value to "0", since you‘re already paying for the insurance.
Interest Rate (car & house):
The interest you pay on your loan. Lenders will often show you two rates: APR & interest. The interest rate is (usually) the lower of the two numbers, and it‘s the one your lender uses to calculate your payments, so enter that number here.
Note - Some calculators will pretend to be "sophisticated" by including how often the interest compounds as a variable. Good in theory, but the truth is compounding frequency has a smaller impact than most people realize (as little as .01 percent), and is often misunderstood. More importantly, almost all lenders compound monthly, so WW does too.
License / Registration Fees (annually) (car only):
The annual cost of purchasing a government license for the right to use your asset. Death and taxes, right? For autos, this charge is equal to your state‘s Vehicle Registration Fee. WW uses data provided by the National Conference of State Legislatures for its estimate.
Lifetime Ownership Cost:
The lifetime cost of purchasing and owning your asset, plus the time-value of the money you spent over the same period, less the asset‘s end-of-life resale value. Whether your money is going toward an asset, or building value in an investment, it‘s always working for you. This value helps Wyse consumers understand the implications of moving your money from one job to another.
Loan Period (Years) (car & house):
The number of years it‘s going to take you to repay your loan, exclusive of deferrals, suspensions, forebearance, non-payment, bankruptcies, death, faking your death and moving to Southeast Asia, or other extenuating circumstances, none of which we strongly recommend (although we hear the Gulf of Thailand is pretty nice all year long).
The annual cost of keeping your asset in good working order, including the labor and materials required for repairs and upkeep. For our estimate, we assume you‘re the type of owner who outsources everything from fuel filters to washing & waxing. Adjust accordingly depending on your comfort level under the hood (or under the chasis).
The annual cost of keeping your asset in good working order, including the labor and materials required for repairs and upkeep. For our estimate, we assume you‘re an owner who outsources her roof replacement but does her own lawncare. Adjust upward or down depending on your level of DIY-ability.
Monthly Loan Payment (car & house):
The amount you pay every month to keep your lender from sending a repo-guy (or gal) named Knuckles to nab your asset in the middle of the night. Includes principal, interest, and any taxes that were rolled in to the loan.
Opportunity Cost (car & house):
The hypothetical return on the amount paid for the asset, if you‘d invested it instead of spent it. At WW, we believe affordability should be more than just a money in, money out equation. Long term financial planning is all about the margins, and the more you have to invest, the more you can get in return. We assume a rate of return of 7%, slightly less than the historical return of most index funds.
Ownership Period in Years (car & house):
The number of years you‘re planning to own the asset. The average homebuyer keeps the same house for about 13 years, whereas the typical car buyer stays behind the wheel for about half that time.
Sales Tax (car only):
The one-time state and/or local tax collected by the seller at the time of purchase. At WW, we use your zip code to predict the amount of sales tax you‘ll have to pay, unless you happen to live in Alaska, New Hampshire, Oregon, Montana or Delaware, in which case you‘re getting off easy.