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Repair or Sell a Wrecked Vehicle

05.01.2012 by Matt Jabs //

The Question:

DFA reader Sara asked:

My car was just in the shop and likely will start needing maintenance due to its mileage and age. If I don’t fix the vehicle can it be sold as is, and how do I figure the trade-in value of post-accident repaired vehicle?

It’s a 2004 Lexus RX 300, with 120,000 miles. My deductible cost for the $7,700 repair cost is $1,000. The car is paid for free and clear. The private party Kelly blue book on this car in” good” condition is $13,000, the trade in price in ”fair” condition is $9,000.

Should I have the car repaired or take the $6,600 from the insurance company for use as a downpayment on another pre-owned certified Lexus?

The Answer:

Hi Sara, thanks for your question.

As I see it you have a couple options:

  1. take the $6,600 in insurance money, sell the vehicle as is, and put the money toward a new car.
  2. repair the vehicle using the insurance money and continue driving (or sell) it.

Let’s compare the two:

Do Not Repair The Vehicle

Before considering this option you need to see if your insurance company writes check to you or the vehicle repair company.

If they address the check to you, you can cash and use it how you like. If not, you’ll have to skip to option two – repair the car to keep or sell.

If they write the check to you you’re free to put the money toward another vehicle. If you can do this I recommend figuring out your selling options for the wrecked vehicle so you can best decide how much money and trouble going this route will be.

If the combined total of insurance money and proceeds from selling or trading in a wrecked vehicle are less than the total for selling a repaired vehicle, you should repair it.

Your options for selling a wrecked vehicle are limited. You can trade it in, call a salvage yard, or put it up for sale on Craigslist and other similar publications. Either way you’ll be disappointed in the price these markets bring, and I’m guessing none will not exceed $1,000. Added to your $6,600 this gives you between $7,000 and $7,500 for the wrecked vehicle.

Now let’s consider fixing it.

Repair The Vehicle

If you use the insurance money to fix the car you can keep it or sell it.

If the repair is complete and done well the KBB value isn’t really affected. However, if the buyers perform a title search (carfax), or you tell them about the accident as an honest seller, which I recommend, you’ll have to adjust the asking price a bit but not much since it’s in excellent working order. I recommend following the golden rule of doing unto others as you would have done unto you (see Matthew 7:12).

Repairing the car will cost you $1,000.

When it’s all said and done can you buy another vehicle for less than $1,000? Probably not, which is why I recommend you fix the vehicle and continue driving it.

Another solid option is to fix it and sell it for KBB value. This will give you a sum of money suitable to purchase another solid vehicle, but to me that’s a lot of unnecessary trouble.

Conclusion

I recommend you fix the car and continue driving it. Your second option is to fix it, sell it, and use the proceeds toward a new vehicle. Your least attractive option is to leave the vehicle wrecked while trying to sell it as is to add to the insurance money (if that’s even possible to get in your name).

Good luck, God bless, and let us know what you decide.

*******

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Categories // Spending Tags // vehicles

We’re Going Down to One Vehicle

02.27.2012 by Matt Jabs //

Back in 2008 I wrecked my Jeep and we were forced to become a one car family. My buddy “knew a guy” who could fix it for cheap – you know how those deals go. What was supposed to take “about a month” quickly deteriorated into 8 months, several yelling matches, and a big headache. Finally, I got my Jeep back in working order.

It was a trying time but it taught us a lot and showed us we could get by with only one car, even when we both worked full-time jobs.

Cost of owning a car

Even if they’re paid off, cars cost more than you think.

Using the [cost of owning a car] equation, the true cost to own and drive our paid off vehicles is around $720/month.

This means owning both cars, even though they’re paid off, costs us roughly $8,650/year.

How many cars are needed

We only need one car.

Nowadays we both work from home, have no children, and spend most of our time together. Since moving to North Carolina a month ago, there has not been a single instance where both vehicles were needed so it’s time to say goodbye to one of them.

How many do you really need? Not want, need.

We thought we needed both back when I crashed my Jeep, but turns out we only needed one; and that was when we both had full-time jobs outside the home.

Our plan for one vehicle

Right now we have a 2000 Jeep Cherokee and a 2002 Pontiac Grand Prix. The Jeep is our utility vehicle; we use it to haul things and drive back roads and bad weather. The Grand Prix is our every day car because it’s a bit more comfortable and gets better gas mileage.

We would like to sell both and purchase a better all-purpose vehicle; kind of like a Subaru but something less expensive with better gas mileage, like a Pontiac Vibe. We priced them out and have test driven a few. We made an offer on one tonight but the owners turned us down (we offered $1,000 less than their asking price).

The plan for now is to sell the Grand Prix, drive the Jeep as our every day vehicle, and continue looking for a Vibe (or something similar, like a used Volvo wagon). If we need to drive a long distance – like our upcoming trip to Michigan – we’ll rent a car with really good gas mileage (like a Ford Focus).

For us it’s way cheaper to own one car and rent a high MPG car for long trips.

God is in the details

It’s easy to think God has better things to do than help us with our car situation; but He does have time for it.

We have to remember that God is in the details! He wants us to come to Him with all our concerns, and buying/selling our cars is a big deal.

“Cast thy burden upon the LORD, and he shall sustain thee: he shall never suffer the righteous to be moved.” Psalm 55:22

We have no way of knowing how long our current vehicles will last and cannot tell exactly which used cars are the best to buy. We can make educated guesses and get a CARFAX, which we do, but only God knows what is best for us… so we invite Him to help.

We want to encourage you to remember God in all your decisions – He cares so deeply for us and wants to be involved with all parts of our lives.

Save money and simplify

Less vehicle ownership means more money in your pocket. You may have to buy a bus pass or give a friend a few bucks for gas but chances are you will save quite a bit by downsizing to one vehicle.

Going down to one vehicle means less money spent toward car payments (if you finance), gas, repairs/maintenance, insurance, and plates/registration.

For us it will save an extra $360 every month. Use this equation to see how much it will save you. Chances are you will save quite a bit even if you have to pay for alternate transportation and rental cars once in awhile.

Another benefit to fewer vehicles is less maintenance and headaches. Simplify, simplify, simplify. Save, save, save.

*******

photo credit

Categories // Money Management, Simplify Tags // save, vehicles

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