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:
- take the $6,600 in insurance money, sell the vehicle as is, and put the money toward a new car.
- 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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