Most car owners are often confused as to whether they should consider their car as a liability or an asset. And if you are wondering about the same, then you need to read on. The fact remains that the moment you drive the car off the lot, it starts to depreciate in value immediately. If you are still not sure, then please go ahead and read the rest of the article.
- Liability or Value Add: When it comes to your assets, it could be a tad confusing to figure out whether your car is a liability or an asset. The fact is that the value of the car decreases over time, thanks to depreciation. So when you declare your assets, you may want to first list out the actual price of the car, to be closely followed by the current depreciated value. If you want more information on how to calculate the current worth of your car, you may want to search online for car wreckers Adelaide, and you should be able to get all the information you require.
- Calculating its current worth: It can be a tad confusing to calculate the current worth of your car. But you can use Kelly’s Blue Book to arrive at an accurate estimate. You just need to enter the details of your car, make, year of purchase, details of any repairs undertaken. Soon, you should be able to arrive at an accurate estimation thanks to the book. However, if you do not have access to the book, then there is a certain formula that you can use to calculate the depreciated price correctly. You just use the standard depreciation rate of 10-20% for per year and calculate the depreciated rate of your car from the same. You may also want to Google truck wreckers Adelaide , since they can help you to correctly estimate the depreciated rate for your car.
- Insurance: The one obvious query that most car owners have is as to whether the car insurance would also depreciate as far as the premium that you have to pay for, each year, Well that is a fair enough question but car insurances do not work like that. As far as the insurance company is concerned, your car is an asset and not a liability. Moreover they are more than likely to charge the same premium rate for your vehicle insurance but this would soon change, the moment you run into an accident. Your insurance premiums would soon increase, right after this.
- Mortgage: If you have mortgaged your car’s title documents for a loan, then it can only be considered as a liability since you would have to repay the mortgage amount with due interest. Essentially, you would be able to sell, rent or lease your car only after you repay the whole mortgage. And once you do, your car’s depreciated value would become asset all over again.
- Repairs: This is yet another issue that others may factor in when calculating the value of your car. Do remember that your car is not brand new and as such, you need to declare any repairs that you may have undertaken in your car. And this would definitely need to be taken into account, when you are calculating the depreciated value of your car. You may also want to consult your mechanic to help you arrive at correct valuation for your vehicle.
These pointers should help you figure out the right value for your car. You can always consult a mechanic or try and calculate the true value of your car on your own. Just remember that your car starts depreciating in value the moment you drive it off the lot. Given the various new models and makes, it may get a tad hard to arrive at a correct estimate. But as pointed out earlier you can always consult your mechanic to get the accurate estimate. And you do need to calculate the right rate, especially since you may be required to list your assets for important documents.