Yusra3
VIP Contributor
Is a car an asset?
A car is a great way to get around, but it can also be a liability. If you're thinking about buying a car and don't know how to manage it, here's what you need to know.
What Are The Types Of Assets?
There are two types of assets: financial assets like stocks and bonds, and non-financial assets like cars. When you buy a car, it's an asset that has value because it can be sold for money or used for other purposes.
How Does A Car Become An Asset?
When you buy something new with cash from the dealership, it's not an asset yet. But when you sell your old car for more than its value, then you have created an asset called capitalized cost basis (CCB). This means that instead of having $10k worth of equity in your old car at the time of sale (which would mean no chance at ever selling), now there would be $10k worth of equity in both your old car AND its replacement!
A car is a great way to get around, but it can also be a liability. If you're thinking about buying a car and don't know how to manage it, here's what you need to know.
What Are The Types Of Assets?
There are two types of assets: financial assets like stocks and bonds, and non-financial assets like cars. When you buy a car, it's an asset that has value because it can be sold for money or used for other purposes.
How Does A Car Become An Asset?
When you buy something new with cash from the dealership, it's not an asset yet. But when you sell your old car for more than its value, then you have created an asset called capitalized cost basis (CCB). This means that instead of having $10k worth of equity in your old car at the time of sale (which would mean no chance at ever selling), now there would be $10k worth of equity in both your old car AND its replacement!
