Doesn’t factoring depreciation into the cost of car ownership rely on the assumption that you will eventually sell that car? If so, why is that a reasonable assumption?

Question

Recently watched [this video](https://www.youtube.com/watch?v=ztHZj6QNlkM) which puts a significant chunk of the cost of owning the vehicle into depreciation. Wouldn’t the loss in value of the vehicle only matter to me if I bought this car with the intent to sell it in the future? I *could* drive the car until the engine block falls apart and it becomes basically unsellable.

In: 2782

Answer 1

I mean, if you don’t factor in depreciation then you instead have to factor in the cost of purchasing the car amortized over the life of the vehicle.

If the car costs $10,000 and you drive it for ten years before dumping it in a lake then the yearly cost of that car is $1,000 in addition to the costs for licensing, repairs, insurance, etc.

But that is essentially the same as factoring in depreciation, you just let it depreciate all the way to 0.