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Is a car loan an asset?
I've been working on my finances, and I'm learning about assets. I currently have a car loan and I'm not sure if it's an actual asset or not—nothing I read explains it clearly! Is my car loan an asset or not?
Eric Schad · Updated on
Reviewed by Shannon Martin, Licensed Insurance Agent.
That’s a good question! I’m sorry to say, though, a
car loan
is the opposite of an asset; it’s a liability. Liabilities are synonymous with debt—they’re something you owe a lender or creditor. Conversely, an asset is something you own that provides some present or future value.
Your car, for example, fits the definition an asset; it’s a liquid asset that can be converted to cash if you needed it. However, selling it wouldn’t relieve you of your car loan liability, unless you took the proceeds to pay off the loan in its entirety.
Car insurance is another example of a liability, albeit one that’s required by law. What makes insurance an interesting liability is that you have the power to lower how much you pay for it on a regular basis. If you’re working on your finances, shopping for
car insurance
is a great way to save money.The easiest way to do this is with the
Jerry
app. We’ll get you personalized quotes from top insurers so that all you need to do is pick the plan that works best for you—and we’ll even help you switch to it! It’s a great way to save yourself both time and money.Best of luck with your finances!
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- Gregory R.
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