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Introduction
When negotiating the price of a car that you would be selling or purchasing and are doing so in the used car market, the history of the car’s accident is an important factor. The history of a vehicle’s accidents will alter its resale value, whether it was in a significant accident or a smaller fender bender. When those substitutions are made, buyers and sellers want to understand how accidents impact value. For example, is a vehicle with a total loss insurance claim worth much less than a vehicle with one minor accident? Not necessarily. The impact of an accident on value could be situational. In any case, regardless of the layer you are looking at you will want to know the difference between total loss and minor accidents when you are buying something.
To get a clearer picture, performing a VIN check through services like VINgurus.com accident check vin can reveal a car’s accident history and provide transparency about the vehicle’s true condition.
What Is a Total Loss and How Does It Impact Resale Value?
A total loss occurs when it would be more expensive to fix the car than the actual cash value (ACV). The ACV is what the car was worth on the market prior to the accident. In this situation, the insurance company will simply declare the car a total loss and pay the owner their ACV or provide them a replacement vehicle. This is usually the result of a bad accident where the car has sustained major structural or mechanical damage.
A totaled car presents risks to a potential resale, since most people would not want to buy a car that has been termed a total loss for fear there are hidden damages or hidden repair costs. Even if the car is fixed after a total loss, the car’s actual cash value will essentially be worth much less than before. Most states will also require a rebuilt title for cars that have been termed a totaled loss and rebuilt. Those cars are typically difficult to sell, and will almost always sell for a fraction of the value of a vehicle that has not been involved in a failed insurance loss.
Rebuilt total loss vehicles may seem like a good deal, but buyers should be careful in checking that the vehicle has been restored safely and completely. Vehicles that have been in an accident and listed as a total loss will also be unable to pass a safety inspection, thus lowering value in the resale market.
Minor Accidents and Their Impact on Car Value
In contrast, a minor accident usually describes an incident in which the vehicle sustains little to no significant damage, such as a dented fender, broken tail light, or a scratched door. Minor accidents are very unlikely to impact the operation of the vehicle or overall safety. Minor accidents are usually repaired in a timely manner and the vehicle can usually be returned to its pre-accident condition, having very little depreciation in value.
Even in a minor accident, the resale value of the vehicle will still be impaired, although the impact is usually significantly less than that of a total loss. Vehicles that have a minor accident history are usually more difficult to sell than vehicles that have no accident history. Buyers are often reluctant to purchase vehicles that have even a minor accident history out of concern for potentially underlying issues. For example, what may appear to be a minor repair may actually involve hidden repair of more structural damage.
How Mileage Plays a Role in Accident Impact
Another important determining factor in potential resale value from an accident is the mileage on the vehicle. In general, low mileage vehicles will hold more value, even if there was a minor accident. Conversely, a high mileage vehicle with a total loss designation can be extremely difficult to sell because buyers will be cautious about long term viability of the vehicle particularly after being involved in a serious accident. A low mileage vehicle can certainly still be salvageable to obtain a solid resale value despite the accident because potential buyers can feel confident that the vehicle still has years of reasonable life left in it.
Conversely, a high mileage vehicle with a total loss will generally be viewed as a poor risk given potential buyers can worry about the workmanship of the accident repairs and repairs required in the future for the vehicle.
How to Protect Resale Value After an Accident
Whether the car has been in a total loss or a minor accident, there are several ways to protect its resale value:
- Document Repairs and Use a Trusted Repair Shop: Keeping detailed records of all repairs and using a reputable repair shop can help prove that the vehicle was properly restored after an accident.
- Get an Accident Report: If you’re buying or selling a car, always check the vehicle’s history report using the VIN. A transparent history of repairs and accident details can make a significant difference in how much a buyer is willing to pay for the car.
- Maintain the Car Well: A well-maintained car, regardless of its accident history, is always more valuable than one that has been neglected. Regular servicing, new tires, and attention to detail can help restore a car’s resale value.
Conclusion
In calculating the effect of accidents on the resale value of a car, both the degree of damage and the vehicle’s history are important. Specifically, a total loss vehicle will depreciate more than those vehicles that had a minor accident. Nevertheless, even minor accidents will affect the resale value of the vehicle; therefore, it is in any buyer’s or seller’s interest to get actively engaged in evaluating a vehicle’s condition and accident history. Vin checking can improve transparency on a vehicle, and assist buyers in making the right choices. Similarly, it is always best practice to keep up maintenance on the car and keep repairing records, both of these things can drastically affect a car’s value when sold. Lastly, knowing the actual cost of an accident, big or small, will help you make better determinations as the seller or buyer of resale value of the car.
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