See, that's where you're not grasping my point. The bank wasn't earning interest on the car. The bank was earning interest on the loan. The loan is your liability. The car is your asset.

Anyway, I'm done. It's not my job to explain this stuff to people. I tried that, and they still don't get it. If you want to verify that I'm right, then go read some basic accounting books or take a class. If you want to go on thinking that I'm wrong, more power to ya.

 

Some people in here have been reading too many "Rich Dad, Poor Dad" books, in which economic concepts were dumbed down by twisting established terminology so that people with little common sense may be able to establish a behavior of better controlled spending and less dependence on debt.

I read one of the books based on a recommendation and about the only thing I learned was that the person that recommended the book to me has little economic understanding.

Just as some in this thread, the book labels such things as cars and houses liabilities because having those items in your possession requires you to pay for related expenses (in short, money out of your pocket).

Essentially the book is attempting to break people's misconception that an asset is something that increases in value by creating a new misconception about what is really a liability (and that liabilities are always negative).

In the end, people here are arguing semantics. However, from any basic accounting class, an S2000 would be considered an asset, albeit a depreciating asset (as most cars are).

On a balance sheet, an S2000 would fall under assets, while the remaining balance on the loan would fall under liabilities. The difference between the market value of the S2000 and the balance on the loan falls under equity. Assets = Liabilities + Equity; thus there is the a balance.

So just as people need to realize that an asset does not necessarily put money in your pocket, a liability does not necessarily take money out. For example, the only reason why I ever financed my S2000 is because I was able to make a much higher return by investing those same funds than the interest rate my CU was offering. So by taking on the liability of a car loan, I was able to increase my net worth more than if I had just paid cash.

 

[QUOTE=addisonc,Aug 8 2008, 02:50 AM] What if you have a loan on the car, and the market value of the vehicle is LESS load amount (i.e. upside-down loan)?

 

geez, enough of the bs college financial lesson, let's get back to the topic, which is how well these cars hold their value...I think it's better than average for a sports car, but demand is definitiely dropping off as the design gets long in the tooth...the S2000 is a niche car with limited demand, but it will always have value to the right buyer unless the next generation renders is completely out-moded, which I don't see happening

 

any eight year old car with the same design and nothing in particular driving demand is going to keep dropping off as time goes on

it's interesting with the 3rd gen RX-7 and Supra Mk IV...they seem to have dropped to a certain point and stay there (Supras especially), even as the years go by, because they are unique/collector type cars which were discontinued

 

It isn't surprising that the car would be depreciating. This is normal for a car at the end of its product cycle. It will eventually flatten out, like most other sports cars, but I imagine that this will happen at the $6,000-7,000 level. Whether it appreciates after that, only time will tell. I wouldn't dare predict what current cars will become classics.

At any rate, since I have no plans to sell mine, its value is a question that my estate will have to deal with, not me.

 

Guys gusy guys. It's actually very simple.

The more S2000's on the road, the more the car will depreciate.

Once Honda stops making them, things will get better.

 

Any one got a guess as to the S2k's odds of even doing as well the Supra in this way?

I'm not feeling optimistic concerning this. especially with the stigma on 4cyl vehicles, especially in the US.

 

Behold, the power of Troll.

 

Who knew that reading this thread could be dangerous to one's health. After printing out this thread along with others I was sitting in my nice cozy tub. When I feel asleep and almost drowned.