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

Depreciation can be viewed as saving up for the next car. But that only applies if you do not take out a loan to buy a car; otherwise loan payments should be used instead of depreciation.

Or the guy in the video might be assuming that “cost” is impact on wealth, which includes value of the car. that is a bit of a theoretical computation.