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Originally Posted by disneysteve
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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You're combining the asset with the liability associated with it. You need to keep them separate.
The car/house is still an asset. Anything that has value (can be sold) is an asset. The loan that needs to be repaid is a separate entity.
The fact that I may owe more on the car/home than what it's worth does not prevent me from selling the car/home and thus realizing its value.