RunningBum
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Jun 18, 2007
- Messages
- 13,264
Kind of like stocks the book value only matters if you're looking to sell the car but if you keep driving it then you have to look at the maintenance cost and divide it by the number of years you plan to keep it. So if you spend $500 on new tires and you get 5yrs out of the car then your operating expense was $100 per yr (plus anything else you did to the car).
Operating expense on a new car would be the (cost + maintenance if any)-residual value divided by the length of time. So if you keep a new car worth $30k for 5yrs and at the end of 5yrs it's worth $15k then (30k - 15k)/5yrs=$3k per year operating cost.
A used car also depreciates. Not as much as a new one, but there is almost always going to be more depreciation over those 5 years you talked about. That used car is going to have an operating expense of a lot more than $100 (plus the other things you did) per year.