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 just re read your post and I think a simpler answer would be to take your case of driving the car till the engine block falls apart and it is unsellable.

What would the annualized cost of what you paid for the car be over the span from when you bought it till when the engine block falls out? It would be purchase price divided by that number of years. That is what depreciation is.