Actual Cash Value (ACV) Defined

Get Car Financing
Even with poor credit.

By

Automotive Editor

Patrick learned to drive on the Detroit freeways with side classes in the Pennsylvania hills. He spent the summer after graduation from the University of Dayton practicing his German-language skills and air-tool technique on the BMW M motor assembly line. An alumnus of the Jalopnik Automotive Media Global Domination Brigade, he currently resides in Manhattan and teaches mathematics when not pondering the state of the vehicular world. 

Follow On: Twitter | Google+ | Website

, Automotive Editor - April 29, 2016

Actual cash value is another term that means something different from what you'd think it naturally means. It should therefore not be a surprise that the idea comes from the insurance industry.

ACV is not what you can expect to get when you sell your car. (Price is not value and vice versa.) Instead it's a calculation based on replacement cost minus depreciation, or how much of a projected life the item has already lived through, and is used to figure payouts on claims.

Say your beloved set of wheels gets totaled or stolen. The insurance company will take the value of replacing that ride and subtract a certain amount based on how old it was, what kind of condition it was likely in at the time of the incident, and so on. Insurance companies usually have a depreciation scale for most big-ticket purchases like cars. If an accident happens on the way home from the dealer right after you pick up the keys, depreciation is minor. After a few years, though, your vehicle's ACV has dropped and your settlement will be much less than the true replacement cost.

In general, read the details of your insurance policy to understand your different options for settlement if you have to make a major claim.

Need a Car Loan?

It only takes a minute.

, Automotive Editor

Patrick learned to drive on the Detroit freeways with side classes in the Pennsylvania hills. He spent the summer after graduation from the University of Dayton practicing his German-language skills and air-tool technique on the BMW M motor assembly line. An alumnus of the Jalopnik Automotive Media Global Domination Brigade, he currently resides in Manhattan and teaches mathematics when not pondering the state of the vehicular world. 

Follow On: Twitter | Google+ | Website

Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.