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

> 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?

Tracking depreciation can matter if you want to know the change in your assets, such as when qualifying for loans. You may not plan to default on the loan but the lender will want to know what they could potentially come after to satisfy your debt, and how much that is worth.

Another reason the change in value is important is for taxation. If you get taxed on your assets then knowing that your car is reducing in value and by how much can be useful for reporting how much you will be taxed based on. Even if you don’t ever plan to sell the car you will be taxed.