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Posted: 9/17/2009 11:19:20 PM EST
I have seen some people say that yes because you owe the money but I have seen other people say no because its a secured loan (the car)


Thoughts?
Link Posted: 9/17/2009 11:21:52 PM EST
(Asset - Depreciation) - Loan Principal seems to be a generally accepted way of doing it
Link Posted: 9/17/2009 11:31:46 PM EST
bear, out of curiosity, why do you say "Asset - Depreciation" vs. current value? Your way seems better, but I'm not sure why.
Link Posted: 9/17/2009 11:32:05 PM EST
[Last Edit: 9/17/2009 11:32:55 PM EST by svtfast]
so would I add $32k to liabilites since that is what I owe? I got the loan for $45k.
Link Posted: 9/17/2009 11:32:23 PM EST
[Last Edit: 9/17/2009 11:33:17 PM EST by PBIR]
IMO, yes it should be. The car will not always cover the loan in cases of repo etc, leaving a liability.

eta: yeah, like this:

Originally Posted By bear_grillz:
(Asset - Depreciation) - Loan Principal seems to be a generally accepted way of doing it


Link Posted: 9/17/2009 11:34:14 PM EST

Originally Posted By PBIR:
IMO, yes it should be. The car will not always cover the loan in cases of repo etc, leaving a liability.


My ETS date from the army is Jan 2015 and my loans due date is Sept 2011. Since the loan payment is an allotment and I will be able to pay off the loan should I really add it in?
Link Posted: 9/17/2009 11:36:54 PM EST
Originally Posted By svtfast:

Originally Posted By PBIR:
IMO, yes it should be. The car will not always cover the loan in cases of repo etc, leaving a liability.


My ETS date from the army is Jan 2015 and my loans due date is Sept 2011. Since the loan payment is an allotment and I will be able to pay off the loan should I really add it in?


It depends. First, what are you doing this for?
Link Posted: 9/18/2009 12:06:09 AM EST
You need to include the current market value of the car in assets and the loan amount in liabilities. You need to constantly update it. If you want to be realistic, use the tradein value, because most likely that is all you would be able to sell it at.
Link Posted: 9/18/2009 9:08:10 AM EST
Anyone else?
Link Posted: 9/18/2009 9:42:27 AM EST
You count the current value of the car as an asset and the outstanding balance of the loan as a liability.
Link Posted: 9/18/2009 10:46:45 AM EST
Yes. If you owe more on the car than it is worth, then it will lower your net worth.

Many people are worth more dead than alive, due to insurance policies.
Link Posted: 9/18/2009 10:58:01 AM EST
I would think that any equity you have in your car would increase your net worth and vice versa.

Own a car outright with a bluebook of 20K and your net worth is 20K

Own a car that you still owe 25K on with a bluebook of 20K and your net worth is -5K.

Own a car that you still owe 15K on with a bluebook of 20K and your net worth is 5K.

But then, you could look at it from the viewpoint that the car is collateral for the loan and is the bank's until the loan is paid in full. They will repo it if you still owe only 1K on a 15K, right? Thus, negating any equity you have in it.

Typically in my dealings of net worth calculation I have only included cars that I own outright.

Link Posted: 9/18/2009 11:00:48 AM EST
The car is a depreciating asset and the balance of the loan is a liability.
Link Posted: 9/18/2009 11:25:36 AM EST
What do you think Net Worth means?

Assets-Liabilities

Car value-outstanding loan balance
Link Posted: 9/18/2009 11:33:28 AM EST
Originally Posted By glock27bill:
What do you think Net Worth means?

Assets-Liabilities

Car value-outstanding loan balance


I'm currently on my third 'vette. I considered none of these as part of my net worth.

Cars are fun toys, and depreciating assets; they should not be considered part of your net worth unless you should die tomorrow. Then it's part of your estate, and no longer your problem, IMHO.



Link Posted: 9/18/2009 11:37:17 AM EST
A company's P&L or an individual's net worth statement is a snapshot of a specific point in time. That is all.

As long as you use the value and the debt from the same time period, it will be acceptable and would withstand any audit from any reputable accounting firm.
Link Posted: 9/18/2009 1:35:27 PM EST
Originally Posted By scuba_ed:
Cars are fun toys, and depreciating assets; they should not be considered part of your net worth unless you should die tomorrow.


There are a gazillion depreciating assets that are "fun toys" - Yachts, personal aircraft, motorhomes, jet skis, snowmobiles, motorcycles, etc. - and they're all counted as assets or liabilities. Why would cars be any different?
Link Posted: 9/18/2009 1:46:44 PM EST
A depreciating item you owe money on is a liability.
Link Posted: 9/18/2009 1:56:05 PM EST
Originally Posted By svtfast:
Anyone else?


The car is an asset, the loan is a liability.

Current value of car - outstanding loan balance = net worth

RF
Link Posted: 9/18/2009 2:23:24 PM EST
Originally Posted By Soylent:
A depreciating item you owe money on is a liability.


LOL

So, a $40,000 truck that you owe $6,000 on is a liability?

Where do y'all come up with these ideas at?

If your widget has any value....ANY value, I mean even 50 cents, it is an asset. If you owe a $1 on it, the widget itself is still listed as an asset and the debt is listed as a liability. Even if you know for a fact that widget will be worth 49 cents next week.

Think of a net worth statement as a picture you took of your assets and your debts. It is ONLY valid at the moment you snapped the picture. It may increase or decrease the next second.
Link Posted: 9/18/2009 2:30:29 PM EST
Originally Posted By glock27bill:
What do you think Net Worth means?

Assets-Liabilities

Car value-outstanding loan balance



Originally Posted By krpind:
A company's P&L or an individuals net worth statement is a snapshot of a specific point in time. That is all.

As long as you use the value and the debt from the same time period, it will be acceptable and would withstand any audit from any reputable accounting firm.


These.


If I decided to leave vehicles off my financial statement I think the bank I do business with may take an issue with that. Especially when they run a credit check and see that a vehicle loan is present. Depending on what kind of loan agreement you have with your bank, being less than truthful with a financial statement can cause some trouble. It doesn't matter if you consider your cars to be assets or liabilities worth mentioning because they do.
Link Posted: 9/18/2009 3:38:52 PM EST
Originally Posted By Skibane:
Originally Posted By scuba_ed:
Cars are fun toys, and depreciating assets; they should not be considered part of your net worth unless you should die tomorrow.


There are a gazillion depreciating assets that are "fun toys" - Yachts, personal aircraft, motorhomes, jet skis, snowmobiles, motorcycles, etc. - and they're all counted as assets or liabilities. Why would cars be any different?


I didn't get the sense from the OP that he had an excess amount of toys, just a car.

Certainly, if he had all those, then he wouldn't have needed to ask the question of a simple $40-k + vehicle, and most certainly wouldn't have asked the question to the hive mind.

In that sense, I answered appropriately based upon the information at hand, while not being explosively ludicrous in my imagination as your post suggests.





Link Posted: 9/18/2009 3:43:13 PM EST
[Last Edit: 9/18/2009 3:44:19 PM EST by Mazeman]

Originally Posted By LoneWolf545:
You count the current value of the car as an asset and the outstanding balance of the loan as a liability.
That's it.

Theoretically, it could be a negative number.

Link Posted: 9/18/2009 3:47:30 PM EST
The loan is most certainly a liability so you ought to put the underlying asset the asset sid of your sheet

Posted Via AR15.Com Mobile
Link Posted: 9/18/2009 3:59:42 PM EST
Originally Posted By krpind:
Originally Posted By Soylent:
A depreciating item you owe money on is a liability.


LOL

So, a $40,000 truck that you owe $6,000 on is a liability?

Where do y'all come up with these ideas at?

If your widget has any value....ANY value, I mean even 50 cents, it is an asset. If you owe a $1 on it, the widget itself is still listed as an asset and the debt is listed as a liability. Even if you know for a fact that widget will be worth 49 cents next week.

Think of a net worth statement as a picture you took of your assets and your debts. It is ONLY valid at the moment you snapped the picture. It may increase or decrease the next second.


Yeah, I was in a hurry to answer a phone call and came back to check. Sure as shit, I put it down wrong.

You are correct.

If that widget is currently worth $1.00 and you owe $2.00 though, you have a net liability is what I was trying to say.
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