Question: My new car has been wrecked. How will this affect the trade-in value down the road?

September 06, 2005

Hi Tony

I came across your website and read the great advice you have given to people. Maybe you can help me.

I bought a new Honda Civic SI this past March, 05. Last week on the way to work, a car pulled out of a side road and hit me on the driver's side just behind the drivers door. This put me into a slide and my front end hit another car.

My car now has damage on the left rear quarter panel, driver's door, door sill, driver's side fender, front bumper, hood, lights and who knows what else. It is at the body shop and I am waiting for the repair costs.

My question and problem is this: when the car is fixed, I will have a new car (3000 miles on it) that has had major repair work, so when I go to trade it in I will get squat for it.

What should I do? Ask for a new car? Don't I have to disclose the fact that it was in a wreck when I trade it in? I am the victim and am getting screwed for being in the wrong place at the wrong time.

Thank you for you time,

Mike C.

Answer:

Hi Mike,

It's a bummer when you wreck a brand new car. I've been down that road. It just makes you sick inside. When the insurance company appraiser looks at the car to determine the amount of the damage he or she will either allow sufficient funds to repair the car - supposedly as new - or the car will be declared a total loss.

In the latter case the insurance co. will pay you what they feel the car is worth based on book value, not necessarily what you may actually owe on the car. This is why having Gap Insurance is so important.

One way you can go is to contact the dealer where you bought the car and tell them you want to trade the car back for a new one. In this scenario the dealer will take the car in trade as if it were whole. Of course the repair money goes to them with the car. This may or may not be feasible depending on what they are willing to offer you. Expect this scenario to probably cost you some money.

You can also simply opt to get the car repaired. The insurance company is supposed to allow sufficient funds to the repairing shop to make the car as good as new. Naturally it's never exactly like new anymore, but it can be for all intents and purposes technically as good as new. In this case you can drive and enjoy the car just like you would have if it weren't wrecked.

Of course you can't let it drive you crazy knowing you are driving around in a repaired car. If you're not careful this can eat at you and make you miserable!

When it comes time to trade the car I am pretty sure you do not have to disclose that it was wrecked. Dealers have to do this if they know about it, but not private individuals (you should check your state's laws to be sure).

So, if the car is repaired well enough it may not be noticeable. If it is it shouldn't hurt the value much unless the car suffered major structural damage and it is still evident after the repair. If repaired professionally this shouldn't be the case. I must say however, that is a Big "If!"

I hope this helps Mike.

All my very best...

Tony Iorio