How to Determine the Salvage Value of a Car

Salvage vehicles have survived an accident, a theft, or a flood and have been issued a "total loss" certificate by an insurance company because the cost to repair the damages done to the vehicle exceeds a certain percentage of the vehicle's cost. The percentage varies from state to state, as does the terminology. Some states indicate a salvage status on a car's title with the term "total loss" instead of "salvage"; others use terms like "rebuilt/restored" or "flood loss." Regardless, salvage vehicles can be purchased for much less than other types of used cars because salvage value is how much a car is worth at the end of its useful life. It is a relatively subjective figure ultimately determined by the company insuring the salvage vehicle, although you can calculate an estimate.

Difficulty: Moderate

Instructions

1. Look up the vehicle's retail value at Kelley Blue Book's website (see Resources). This is the value assigned to the vehicle through a car dealer, assuming the car is in near-perfect condition.

2. Determine the vehicle's wholesale price or trade-in value by looking it up through National Automobile Dealers Association (see Resources).

3. Add the two figures and divide them by 2 to get the car's current market value.

4. Determine the percentage used by the insurance company deeming the vehicle a "salvage vehicle." Sometimes this is 75 percent of the market value, but each insurance company can choose its own percentage.

5. Multiply the vehicle's current market value (from Step 3) by this percentage to get an estimated salvage value.

Tips & Warnings

• If you do not know which insurance company is involved, use a few percentages (70, 75, and 80, for example) in the equation to get a range of possible salvage values.

References

• Depretiation Calculation
• National Automobile Dealers Association
• How Much Does an Insurance Company Pay

Resources

• National Automobile Dealers Association
• Kelley Blue Book