How to Calculate the Value of Salvaged Vehicles

Believe it or not, it’s certainly possible to sell a salvage car. In fact, there’s a whole subset of the auto industry that’s making a huge profit off of it.

Especially with the skyrocketing price of second-hand cars, salvage buyers and resellers have been able to pick up these cars for cheap and flip them for thousands more.

So where does that leave you, the seller? 

In this article, I’ll show you exactly how to calculate your salvage car’s worth as someone with more than 40 years in the motor trade.

What is a salvage vehicle?

A salvage vehicle is a car that has been deemed a total loss, either due to severe damage or lack of viable parts. When the insurance company decides the cost of repairs to make it roadworthy outweighs its total value, they’ll ‘write off’ the car by issuing a salvage title. 

The decision of whether or not to issue a salvage title is up to the insurer. They will issue an inspection that assesses whether it’s economically feasible to make the car driveable again. 

Write-offs typically happen after a car has been involved in a serious accident or a natural disaster (e.g., a flood) has ruined it beyond repair.

Written-off vehicles are usually sent to the scrapyard, where their parts are salvaged and recycled for use in other cars. However, some salvage vehicles are still driveable or repairable and can be sold for a fraction of their original value via a car auction.

Understanding Salvage Categories

When an insurance company writes off a car, they’ll classify it into one of six categories the Association of British Insurers (ABI) establishes.

Here’s a look at each category and what it means:

• Category A — Scrap only. Parting it out isn’t even an option.
• Category B — Some specified parts are removable, but the car as a whole has to be scrapped.
• Category S — Significant structural damage makes it a write-off, but the vehicle itself is potentially repairable.
• Category N — Non-structural damage renders the car a total loss, but, like Category S, repairs are still a possibility.
• Category U — The details around the accident are unclear, so the write-off is unrecorded.
• Category X — The car was subject to an insurance claim but maintained little to no damage. It’s often the case with stolen vehicles that were recovered shortly after.

A lot of the time, those who own salvage vehicles send them to the scrap yard because it’s the easiest way to get rid of them (and they probably think nobody wants to buy them).

In truth, many people buy salvage cars categorised as ‘N’ or ‘S’ and resell them once they’re roadworthy. 

That isn’t the case for those categorised as ‘A’ or ‘B’. By law, they’re deemed too unsafe for public roads. UK law requires them to be scrapped.

Easy Steps to Calculate the Value of Your Salvage Vehicle

Calculating the value of your scrapped vehicle might seem like a guessing game. After all, how could you really know who’s willing to pay and how much?

The reality is it isn’t too hard at all. Let’s break it down.

Research the Make, Model and Year

Your first step is to research the wholesale value of your car based on its make, model and year. 

Of course, your car is used and (probably) damaged. It won’t fetch the retail price of similar second-hand cars. But this is a great starting point because it gives you a roundabout number you can subtract from.

You can check local dealerships, look online for similar used models and use a car valuation calculator to set realistic expectations for the sale process going forward. 

Consider Market Value

Determining the market fair value of your salvage car is a bit more difficult. The offers you’ll receive when selling a damaged car with a salvage title will vary from buyer to buyer. And until you test the waters yourself, they’re a bit unpredictable.

You’ll have to do extensive research. In a lot of cases, you won’t completely understand its market value until you go ahead and list it.

First off, many dealers won’t accept salvage cars. This could be because your car has structural damage or significant mechanical issues. Or, it merely falls into a category they’re not interested in. If you’re selling a non-running car, they almost certainly won’t take it.

To get a read on market value, your first step will be to contact as many dealers as possible to find the ones that do take salvage cars. Find out what they would offer for your car, and take it into a few dealerships if you can.

Next, look online. When you sell your car to a dealership, they take a cut. So you’ll need to see what others offer you and compare it to dealerships to get the full picture.

Contact the Insurance Company

Once you’ve tested the market, call the insurance company that wrote off the car. Ask them what percentage of a car’s market value they use to determine a salvage car’s value. 

The typical percentage they land at hovers between 75% and 80%. This would mean that after fixing the car, the value would be around 20% to 25% less than its regular market value. 

Multiply that value by your estimated market value (e.g., Market Value X .75) and you’ll have a conservative estimate of what you can expect for the car.

Examine the Vehicle's Condition

Next, you’ll want to look at your car’s current condition. Do a complete assessment, inside and out.  

Depending on whether you’re looking at a Category S, N, U or X, you might have no damage at all. Or, you could have something that makes your car ugly or undriveable (like a crushed-in door or missing rear bumper).

If your insurer issued a salvage title for structural or non-structural damage, those elements will be very obvious. But you should also assess the following:

• The interior, including your seats, center console, trunk and floors
• The hood and everything under it
• The stereo, GPS and all electronics
• The battery
• The tyres, wheels and brake calipers

Especially if your salvage car has been sitting untouched for a while, you might notice a dead battery or a faltering stereo. If you were in an accident or your car was stolen, you might notice small flaws like paint scuffs or dents on the wheels.

All these tiny issues play a role in how much money you’ll be able to get for your salvage car.

In any case, assessing your car’s current situation will help you decide whether fixing it and reselling it further down the road could be worth your money.

Determine the Extent of Damage

After looking carefully at the different parts of your car and taking notes of any and all damage, ask yourself, "How bad is it?"

Chances are, you won't know the full extent until you take it in for a repair quote (especially if your car is Category N). Sometimes, the cost to get everything in working order won't be directly obvious just from lifting the hood or looking at the exterior. And if you don't understand the interoperability of certain parts, you won't know if they'll need to be replaced.

Suppose your vehicle was parked outside and was swept away in a massive flood. You won't know until you bring it to a technician, who can tell you how much replacement parts and labour would set you back.

What you might not realize is that other parts (such as the suspension, transmission or brakes) might have been compromised since the incident. When the insurance company issued a salvage title, all they did was write it off. They aren't keeping tabs on it.

Floods cause rust and corrosion that damage the metal components of your salvage car over time. Even if your salvage car has been sitting for just a few months, it could have incurred thousands of pounds in additional repairs and replacements.

Get Multiple Quotes

Even after one visit to the local repair shop, you probably won't know how much it costs to fix your car. Maybe you got unlucky and that shop overcharges its customers. Or maybe they exaggerated the work required.

You need to make sure you’re getting a fair deal, so don't stop at one shop. Visit three or four. And make sure they all give a description of the work that needs to be done before beginning repairs.

Assess Repair Costs

Once you have multiple quotes in front of you, refer back to your market value estimate and subtract the repair costs from it.

Remember, you have to factor in the costs of preparing your car for sale after fixing it. Depending on the state of your car, that could be a lot of money. You’ll need to have it detailed, take it for an MOT test (assuming you haven't driven it since the accident), and have it transported to your buyer.

If you want to make it roadworthy before selling it, you will also have to insure it. And that includes the time you list it for sale. Otherwise, you're completely unprotected should something else happen to it.

In total, you'll probably spend at least a few hundred pounds extra during the sales process.

If, after tallying everything up, you aren't making at least £1,000, it probably isn't worth your time and effort.

Factor in Upgrades and Modifications

Selling a modified car can allow you to charge more if you added upgraded equipment from the original manufacturer. Performance wheels, brakes, tyres or suspension can help you get a higher price if they came from the same brand as your car.

In fact, one of the main ways salvage car resellers turn a profit on their investments is by customizing the vehicle with upgraded parts.

Of course, some improvements are more valuable than others. Upgrades that improve your car's street performance, off-road capabilities or racing abilities will attract plenty of buyers who would pay thousands of pounds more. This is especially the case given these improvements would be brand-new.

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Find Insurance Cover

Just because your car is "fixable" and technically driveable doesn't mean an insurance company will take on the liability. That's a huge roadblock considering insurers generally terminate the policy as soon as they write off the car.

In our experience, most Category S cars are near-impossible to insure. If a company will give them a policy, it'll come with insanely high premiums.

For Category N cars, there are more options. But even then, premiums are higher than they would be had the car not been salvaged.

In nearly all cases, you won’t be able to get a wholesale car insurance policy — just one that covers third-party liability.

Explore Your Other Options

Even if your repairs turn out to be profitable, they might not be the most profitable option. For example, if some of your more valuable parts (e.g., catalytic converter, transmission, wheels) are in good shape, you could easily make £2,000+ back.

Before pulling the trigger, consider what you could make by selling your car for parts. Sometimes, the extra money you could make parting out your car ends up being more than the value of the car minus repair and upgrade costs.

This is almost always true for salvaged cars that are not drivable. Chances are good you won’t be able to recoup too much by selling it as a whole unless you have a network. It's sometimes much easier (and potentially more lucrative) to strip down the car and sell its working components one by one.

Consider Legal Requirements

You can sell your car with a salvage title. That isn't the concern.

The concern is it's a criminal offence to sell a car that isn't roadworthy to someone who intends to drive it on public roads. You are legally obligated to let the buyer know the car was/is a write-off.

By definition, salvage cars cannot be roadworthy. You cannot tax them. And they're uninsured.

So, unless you have your salvage title cleared before selling the car, your buyer won't even be able to drive off with their purchase. You'll have to arrange a tow.

Negotiate the Price

If you can negotiate at all, it can't hurt. If you're really interested in getting your car back on the road and selling it, see if the repair shop or mechanics will do a deal.

For example, a mechanic might be willing to shave off a few hundred pounds if you're upgrading a part and let them keep the old one. 

Make an Informed Decision

At the end of the day, the entire reason your car was written off was that the repairs exceeded its market value. 

Insurance companies stay afloat by carefully calculating risk. If the multimillion-dollar business that’s been doing this for decades thinks your car doesn't make financial sense to repair, what does that tell you?

Whatever the payout is for parting your car out or taking a payout from insurance, it's almost always higher than what you'd get by seeing this process through.

For that reason, it's also worth assessing whether or not getting multiple quotes and figuring out repair costs is even worth your time.

To sum it all up…

More often than not, it's a better idea to take the payout. But we also didn't account for sentimental value and emotional connection, which only you can put a price on.

Whatever decision you make, make sure to go into it informed. Be aware of your car's market value and repair costs, look up what other similar cars are selling for after similar repairs, and factor in the additional costs associated with getting your vehicle ready for sale.

If everything adds up favourably and you're willing to put in the work to sell your car, we wish you the best of luck!