WHAT IS DIMINISHED VALUE?

What is diminished value? Diminished value is the reduction in a vehicle’s market value occurring after a vehicle is damaged and then repaired.

Collision history is a relevant fact, and so is diminished value. Industry research indicates that severely damaged and repaired vehicles can lose as much as 40% of their pre damage value, even with quality repairs. Of course, the amount of value lost by a particular vehicle is dependent on many factors, such as the year, make, model, condition, location of damage and the extent of damage. It has been determined that 43% of consumers would not even consider purchasing a vehicle with a moderate to severe damage history regardless of the price. Many States require disclosure of damage at the time of sale. As a result of these disclosure requirements, dealers would send these vehicles to auction rather than incur the risk of having them on their lot for extended periods of time.

Vehicle values are based on the perception of the buying public; As is the case with any item of value, the fact that a vehicle has been damaged and repaired will have a negative effect on its value. Most consumers today utilize numerous information sources when making a purchasing decision. With the creation of several Internet based vehicle history reporting companies, such as CARFAX®, it is easier than ever before to research the history of a vehicle. Most dealerships will simply refuse to accept trade-ins with a damage history due to state damage disclosure laws and liability concerns. In some cases where previously damaged and repaired vehicles are accepted as trade-ins they are simply sent to auction for disposal. Even at auction, there are requirements for disclosure of structural damage or air bag deployment. This means that the auctioneer must make an announcement of this kind of damage when the vehicle enters the auction lane. In addition to this announcement, a yellow light is turned on indicating caution to any potential bidders.

Calculate your vehicle’s Diminished Value
Use our NADVA diminished value calculator to determine the diminished value your vehicle has lost.

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