How To Calculate Salvage Value Of An Automobile

By Jay White

February 25, 2019   •   Fact checked by Dumb Little Man

calculating salvage value of a car

When a vehicle is damaged beyond repair, automobile insurance companies declare it a total loss. Now, if that’s the case with your car, don’t throw it out just yet.

While it may not be cost-effective to repair the vehicle, it still retains some salvage value. In addition to the value of its scrap metal, the vehicle may have some serviceable parts that can be removed and sold as repair parts for other vehicles. In some cases, older cars with minor damage may be written off as the cost of repairs exceeds the current value of the vehicle.

Calculating the Salvage Value of Your Car

The salvage value of an automobile will vary depending on the state as well as the year, make, model, and condition of the car. Here’s a guide on how to calculate it:

  • Look up the retail and wholesale value of a similar vehicle using resources like the Kelly Blue Book and National Automobile Dealers Association Used Car Guide.
  • Add these two figures together and divide the sum by two to get the car’s current market value.
  • Contact your insurance company for the percentage of market value that it uses for determining salvage value. Although the percentage can vary, it is typically 75 percent of market value.
  • Multiply the car’s current market value determined earlier by 0.25 (1.00 minus 0.75) to find its salvage value.
  • The result of this calculation will always be lower than the current market value of the car. If the cost of repairs exceeds this amount, the car is written off as a loss.

Knowing Your Options

When a car is totaled, owners can elect one of two options.

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The first option is to collect a settlement check from the insurance company, which is the market value minus any deductibles, and sign over the title to the insurance company. The insurance company then sells the car to a salvage yard.

The other option is to keep the vehicle and collect a settlement from the insurance company. It’s equal to the market value of the car minus deductibles and the salvage value of the car. In this case, you are buying the car back from the insurance company.

The Department of Motor Vehicles will issue a new salvage title for the vehicle. You can keep the vehicle, repair it, or sell it to a salvage yard. Perhaps, you’ll receive a higher price than what the insurance claim calculated as the value of the vehicle.

See Also: 10 Things You Didn’t Know About Your Car Insurance

Jay White

I started Dumb Little Man many years ago so great authors, writers and bloggers could share their life "hacks" and tips for success with everyone. I hope you find something you like!

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