Quote:
Originally Posted by Merch
If you purchase a car, it is an asset. It has positive value. Someone will buy it from you for money.
I got a loan on the car instead of paying cash. Does this change what the car is?
I believe this parallels a house. The mortgage is a liability that is securitized by an asset (the house).
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I agree with one exception. What if you owe more than the car or home is worth? Is it still an asset? It no longer has "positive value" in that case. Lots of people are finding themselves in that situation now with homes bought during the bubble with interest-only loans and no downpayment. And people do it with cars all the time. They trade in a car that isn't paid off yet and roll that balance into a new loan, putting themselves into a situation where they owe a lot more than the new car is worth.
Can you call something an asset if it has a negative value?
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