You have a car that is valued at $12,000. The balance that you owe on the car loan is $7,000. You lose your job and can not afford to make payments on your loan so you sell the car for $9,000 and pay off the loan. Explain how your net worth is affected by your actions.

Question

Revolt · Accepted Answer

My net worth decreases by $3,000. Before the sale, the car contributes $5,000 to my net worth ($12,000 value minus the $7,000 loan). After selling it and paying off the loan, I have $2,000 left, so my net worth is $2,000.

Net Worth

You have a car that is valued at $12,000. The balance that you owe on the car loan is $7,000. You lose your job and can not afford to make payments on your loan so you sell the car for $9,000 and pay off the loan. Explain how your net worth is affected by your actions.

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