How to Determine the Salvage Value of a New Vehicle for Depreciation
Salvage value is a term used by accountants and actuaries in reference to the ending value of an asset after its useful life. For instance, certain medical equipment is made with all copper. While the equipment may only have a useful life of five years, the value of copper is somewhat perennial and can be melted as scrap and sold. The estimated value of the scrap is the salvage value. In the case of automobiles, the scrap value is determined by the worth of the car parts. The best place to get an estimate for parts is the salvage yard or used car dealer.
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Instructions
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Look up the worth of the vehicle model in an automobile guide such as the Kelly Blue Book or the National Association of Automobile Dealers. Once you have the value deduct 40 to 50 percent for an estimate of the salvage value depending on the brand.
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Request an estimate from a local dealership. They will be able to provide you with a market-based salvage value.
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Contact a licensed salvage vendor for an estimate. This is who the insurance agencies use and you may be charged a fee.
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Check around at different salvage yards for an estimate. Note the price of older car models. Determine if the model holds its value. Cars which traditionally depreciate faster in value are also said to have less reputable brands. However, this is not always the case. This is why salvage value will always be dynamic for vehicles.
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Find the average of these numbers: 1) adjusted automobile guide, 2) estimate from local dealership, 3) licensed salvage vendor, and 4) salvage yard.
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