The strategy in one paragraph
With a fixed allowance, retained value = cash you keep + equity you build. You grow it three ways: keep the payment well below the net allowance (surplus), pick a vehicle that resists depreciation (retention), and send surplus to principal so you're never underwater (equity). The gauge, table and bars above show all three levers reacting as you drag the sliders.
Frequently asked questions
Is a car allowance taxable?
In the US, a flat monthly car allowance is taxable wages unless it's paid under an accountable plan (documented business mileage, e.g. IRS-rate reimbursement). A $700/mo allowance at a 22% marginal rate nets $546.
How should I pick a vehicle for a car allowance?
Maximize retained value, not the payment you can afford: keep the loan payment well below the net allowance, choose a vehicle with strong resale retention, and send the monthly surplus to principal so you build equity faster than the vehicle depreciates.
What does 'underwater' mean and why does it matter?
Owing more than the vehicle is worth. High-mileage drivers depreciate vehicles faster than average, so a slow-depreciating model and extra principal payments shorten the underwater window — the year-by-year table shows exactly when you cross into positive equity.