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The Expert Podcast brings you firsthand narratives from experts across diverse industries, including private investigators, general contractors and builders, insurance agencies, vehicle specialists, lawyers, and many others.
Even if you're not thinking about selling your vehicle, you should get a cash offer for your vehicle three or four times a year. There's several different places you can do it: Kelly Blue Book (KBB) is one, TrueCar is one, CarGurus is another one. There's many different options; even CarMax has a process where they'll give you a cash offer. These are, as it says here, an official offer to buy your car—a true cash offer in minutes.
What you do is put in your VIN number, your ZIP code, and a couple of other pieces of information such as mileage, and they give you a bona fide cash offer for your vehicle. Now, why would you want to get that if you're not planning on selling it? A couple of reasons: first of all, to get an idea of what your car is worth at any given time. You can compare it with if you have a loan on the car to know what your equity situation is. More importantly, if anything happens to your vehicle—if it's stolen or wrecked—you will know what that vehicle was worth prior to that happening.
Why is that important? Well, let's say if your car is stolen and then your insurance company says, "Hey, we're going to give you this much money for it." You'll know what the car was worth before it was stolen, so you'll know if your insurance company is trying to lowball you. Also, if the car is wrecked and the insurance company pays to fix it, after it's fixed, you should get another cash offer for it, maybe a month or two after it's fixed.
Here's why: when your car is repaired under an insurance claim, it will have a record of that damage in Carfax that will affect the value of your vehicle. It’ll be called what's known as diminished value. So, let's say if your car was worth $25,000 before the wreck. After it gets wrecked, fixed, and looks back to normal, it may still have a Carfax record of collision damage. Now, when you get a value, it’s only worth $22,000.
You have a diminished value of $3,000. You don’t want to let that slide. Most states have a rule that says the insurance company has to pay you for that diminished value. Some will do it automatically and just send you a check; some will not, and you have to ask for it. In some states, it’s not part of the law, but it may be in your policy. Your insurance policy might state that they pay for diminished value, but you have to tell them what the diminished value is. If you have a record of what the vehicle was worth before it was wrecked and repaired, you can go back and have it documented. You can have the printout of that official value.
Normally, when you get one of these official values, they also send you an email, so you'll have it in your email. Even if you don’t get this two or three times a year, if your car is wrecked, on the same day, get an official offer to buy and put in the condition as good—don’t put that it’s wrecked—so you have that documented. It’s very unlikely your car gets wrecked or stolen; it’s a pretty rare occurrence. But for the two or three minutes it takes a few times a year to get your value documented, it’ll help certify your personal net worth. Just like you want to know what your house is worth, you go on Zillow. You want to keep track of your vehicle valuations so that if they’re going up or down, you can keep track of what your depreciation is.
Also, if you find that your vehicle is worth a lot more than you thought, that might be a reason that you do want to sell it. Maybe you want to trade it in for a newer vehicle. We had a client we talked to a couple of weeks ago who had a minivan they thought was only worth about $22,000. Turns out they got a cash offer for $30,000, and they could buy a new one for $37,000. Their car was 2 and a half years old. So, they could, for about $7,000 difference, jump up two model years of the car, going from 38,000 miles to zero miles. Had they not known that, they would have kept driving their car a few more years, and this puts them ahead of the game.
So, always knowing what your car's worth can help you make decisions. More importantly, it can help you make sure that your diminished value is not ignored by your insurance company or what they’re required to pay under statutes.
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