If your car has been vandalized, flooded, or in a massive wreck, chances are your insurance company will consider it a total loss. That’s when the cost of repairing the car is so high that it’s not worth fixing, so the insurance company sends it to auction. However, you have the option of buying the car back from the insurance if you think it is still usable or repairable. But is it really worth doing?
Your total car purchase depends on how damaged it is
Whether or not it is worth buying back your entire car depends on the damage it suffered after the accident. If there is a lot of damage to the car’s chassis, it may not be worth it. But if the damage doesn’t seem that bad and the insurance totals it anyway, it might be worth it for you to buy it back from the insurance company.
If you don’t plan on driving it, but still want to buy it back, there are several things you can do with it, including:
- Use it for parts for another car
- Sell the coins for some extra cash
- Sell it to a junkyard
- Donate it to charity
Whichever option you choose, it starts with the actual cash value of the car first.
What is the “true cash value of a car?”
RELATED: What Happens If A Dealer Totals Up Your Car?
According to Kelley Blue Book, the actual cash value (ACV) of your car is “how much it was worth just before the loss”. This value does not mean that you will get what you paid for the vehicle, as the depreciation of the car is also taken into account.
That being said, how much your insurance company pays you depends on the state you live in. In Arizona, for example, the state threshold for totaling a car is 70% of its ACV. This means that if you have a car with an ACV of $10,000, the insurance company will consider it a total loss if the damage is $7,000 or more. In this case, if you wanted to buy the car back, it’s up to you whether you think it’s worth it or not.
Buying out your car could lead to headaches later
If you plan on keeping the car, it’s important to understand what you’re getting into. Just because the damage doesn’t look too bad from the outside of the car doesn’t mean there’s more damage underneath. If you buy the car back, you’re stuck with those repairs as well.
Also, your car will now have a “rebuilt”, “salvage” or “total loss” title, which will decrease its value if you try to sell it later. Insurance is also a factor, as some insurance companies will only cover a salvaged car with liability only, not all perils and collision, as it is difficult for them to access the current condition of the car. This means that if you were to have an accident in the car again, you would be really out of luck.
In the end, it might be worth buying your whole car back if the damage isn’t too bad. However, you could roll the dice with this. If all else fails, take the insurance payment instead and spend it on another set of wheels. You can thank yourself later.
RELATED: Your Car Insurance Could Cost More If You Don’t Have A College…