Do Cars Lose Value After an Accident?

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Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


, Contributing Writer - August 2, 2021

Yes, an accident can make your vehicle lose a lot of its value and desirability to future buyers. How much value it loses depends on the severity of the accident, and the condition of your vehicle at the time of the accident.

Accidents and Your Car’s Value

Once your car is in an accident, it loses value immediately. Even if you repair the vehicle, it’s likely to be worth less than a vehicle without any accidents on its record. This is largely due to buyers. Many buyers want to avoid purchasing vehicles with past accidents. Even if the car was repaired, there could still be a risk of future issues due to the past accident, especially if the vehicle sustained major damage to its frame or underhood systems.

Every reported accident is likely to be listed on your vehicle’s history report. Future buyers or dealerships you try to trade in your car are likely to pull your vehicle’s history report, and depending on the severity of the past accident, may turn you down for the sale or significantly lower their offer.

How Much Value Can a Car Lose After an Accident?

How much value your vehicle loses after an accident is dependent on the severity of it – moderate damage, major structural damage, severe damage, etc. Auto insurance companies use a specialized formula to calculate diminished value, called a 17c. This helps determine your vehicle’s value after an accident and repairs, and factors in mileage as well.

After you file a claim with your auto insurance, the car is appraised, and if it costs more than 70% of the vehicle’s value to fix, it’s likely to be deemed a total loss, or totaled, by the insurance company. In this case, they pay out the car’s value at the time of the accident. Many borrowers use that money to purchase a replacement vehicle or to assist them in buying another one.

Other Things That Can Cause Loss of Value

Accidents can cause loss of value, but simply driving your vehicle and tacking on mileage lowers its value, too.

Vehicles are different from something like a house. A house can lose value, but in comparison, can likely be used for many more years than a car – meaning they tend to hold their value better or even increase it with time and renovations.

Vehicles are almost always depreciating assets. As soon as you drive a brand new car off a dealer’s lot, it starts to lose value. A typical new vehicle costs around $40,000 nowadays and could lose around $8,000 of value in just one year.

A brand new car could lose around 15% to 20% of its value within the first year of ownership, and typically, vehicles continue to lose around 10% to 15% of their value each year with normal use. After five years, your car can lose around 60% of its value.

Once a car hits their teenage years, they’re not likely to be worth much to future buyers. The risk of mechanical failure increases with age, mileage, and normal wear and tear. Preserving your vehicle’s value over time starts with regular maintenance, avoiding accidents (to the best of your ability), and repairing your vehicle when it’s needed.

If just driving a new vehicle off a dealership’s lot can cause a loss of value, imagine what an accident can do.

Car on its Last Leg?

Finding another vehicle after an accident can be a hassle if your credit score isn’t in the best shape. Many traditional auto lenders prefer good credit borrowers, and if you’re in a tight spot, it can be frustrating if your credit is what’s stopping you from getting a vehicle.

Here at CarsDirect, we want to make your search for a car easier with our nationwide network of special finance dealerships. To start the process of getting matched to a dealer in your local area with bad credit lending options, complete our free auto loan request form.

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, Contributing Writer

Bethany Hickey is a graduate from the University of Michigan-Flint, with a bachelor’s in English-Writing. She is a content writer for Auto Credit Express, CarsDirect, and many other automotive blogs, as well as the Poetry Editor for UM-Flint’s writing magazine.


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