You cannot generally get a loan on a car with much hail damage. Buyer pool now significantly smaller = less value, must sell for less to attract one of the few potential buyers.
This means for most people trying to unload their hail damaged car, they get to sell to dealer at auction pricing (aka rock bottom prices, penny on the dollar value), sell it to an auction yourself, or hope someone on CraigsList is desperate for a car enough they don't care it's a golf ball.
It's interesting how something like this might be hard to understand if you haven't been through it. Previously working in the car industry, not understanding this is actually common among car buyers and a source of frustration for people who get stuck in their low-value, hail damaged cars.
Think about something other than a car: If I buy something that is normally worth X, but it is damaged and is now worth 0.3X and there I pay 0.3X I did not save 0.7X off what I got... I got something worth what I paid.
You cannot extract value from a deal where you were paying less because you received less (aka damaged and less valuable property with less market value).
TLDR: When you buy a hail-damaged car, you get a discount. When you sell a hail damaged car you give a discount. The discount you give is always lower than the discount you get, hence you come out ahead in dollar values.
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I get all that (and will address specific comments below), but first, look at it this way:
1. The selling price of the car without hail damage at 3 years old is `$X`.
2. The selling price of the car with hail damage at 3 years old is `$X - $Y`, where `-$Y` is the value of the hail damage (hence it is negative).
3. The selling price of the car with hail damage at 9 years old is `$X - $Y - $Z`, where `-$Z` is the value of the depreciation (also why it is negative).
Since the car selling price never gets to zero or below AND $Z flattens out over time, $Y must also flatten out over time! IOW it is also asymptotic.
This means that the discount of buying a hail-damaged car (the `-$Y`) is large for a new car and small for an old car.
In practical terms, in the context of buying, using and then selling a hail-damaged car:
1. You buy a $30k car and get a discount of (say) $10k due to hail damage.
2. Six years and many miles later that car, which might have sold for $10k without hail damage, will now sell for only $7k.
You got a discount of $10k and only gave a discount of $3k. You're $7k up.
> If I buy something that is normally worth X, but it is damaged and is now worth 0.3X and there I pay 0.3X I did not save 0.7X off what I got... I got something worth what I paid.
You are conflating `value in market` and `value of utility`. Whatever you are paying for a product, you pay that only because the value you get from the that product is greater than the amount of money you are paying.
Hail damage does not reduce the utility value of a car by even a single cent. It will transport your cargo and passengers exactly the same and with exactly the same levels of safety, comfort and reliability that its non-hail-damaged counterpart would.
The utility of a hail-damaged car is exactly the same as the utility of its undamaged counterpart. The difference in price between a hail damaged car and its undamaged counterpart is the exact monetary value placed by the market on "how pretty is it?"
You cannot generally get a loan on a car with much hail damage. Buyer pool now significantly smaller = less value, must sell for less to attract one of the few potential buyers.
This means for most people trying to unload their hail damaged car, they get to sell to dealer at auction pricing (aka rock bottom prices, penny on the dollar value), sell it to an auction yourself, or hope someone on CraigsList is desperate for a car enough they don't care it's a golf ball.
It's interesting how something like this might be hard to understand if you haven't been through it. Previously working in the car industry, not understanding this is actually common among car buyers and a source of frustration for people who get stuck in their low-value, hail damaged cars.
Think about something other than a car: If I buy something that is normally worth X, but it is damaged and is now worth 0.3X and there I pay 0.3X I did not save 0.7X off what I got... I got something worth what I paid.
You cannot extract value from a deal where you were paying less because you received less (aka damaged and less valuable property with less market value).