The simple and easy answer to this question is YES, your car is an asset. Your car is an asset. By definition, “An asset is anything of value that can be converted into cash.” You can put your car on the market today and sell it. That alone classifies your car as an asset. It is essential to understand what a liability is, explaining why several people are confused about whether to classify their cars as assets or liabilities.
Assets are resources that you own, while liabilities are obligations that you have.
Your car fits under the category of assets because it is a valuable property to you. You can also easily convert it to cash.
What if I bought my car with a loan?
Buying your car with a loan does not make it a liability. First, you must separate the car from the loan that financed its purchase. The vehicle is an asset, the loan (or the debt) associated with its acquisition is a liability.
So what kind of asset is my car?
An asset is either depreciating or appreciating. Your car is a depreciating asset as the price you can sell your car reduces over time, unlike most real estate investments and other types of assets. That your car is a depreciating asset does not make it invaluable. The question you want to ask is, “am I getting value out of ownership of this car while I own it?” For example, making deliveries as a business, commuting around cities with terrible bus transportations, using your car as Uber, etc.
It is essential to understand the nature of cars as depreciating assets—this why you should consider utility versus cost before buying that car or taking a car loan. While your vehicle is still in your possession, treat it as an asset and add it to your list of assets.