To an insurance company, a car is totalled when the price to repair it is higher than the current value of the car. Essentially, the insurance company says that the car becomes worthless. However, the insurance company does not have the final say. Depending on the model of the car, the year it was manufactured, and what is wrong with it, the car could still be very valuable.
Value as a Car
When you are looking to get rid of a nonfunctioning car, there are many things to consider. First and foremost, your car has value as a car itself. Any scrap car quote you receive will probably consider this first. How easily could your car be restored to functioning? While the insurance company might have determined that your vehicle is worthless and too expensive to fix, a scrapper might feel different.
For example, if you have a completely destroyed transmission in your car but it is in fairly decent condition otherwise, a scrapyard might have a use for it. If they have the same model car in their scrapyard, they might be able to replace your broken transmission with the functioning transmission at no cost to them. Because of this, the car might not be as totalled as you think.
Value as Parts
Sometimes, cars are truly totalled and no longer worth being repaired. However, this does not mean they are worthless. In many ways, a car becomes more valuable when it is sold as parts. Especially for older and rarer cars, the parts are only getting more expensive as they become harder to find. In many cases, the monetary sum of the parts is actually higher than the price of the car itself.
Some scrappers will buy your totalled vehicle because it has value for its parts. This is especially true for classic cars. Very few companies are still producing carburettors and the large overhead air filters for muscle cars. The cheapest option is to buy from a scrapyard. However, this is not only true for classic cars.
Value as Materials
Lastly, a car has value as raw materials. Some cars are so far gone that they are not worth it to repair or restore. These cars are taken to scrapyards where the scrapper will process the car to be sold as materials. Typically, this means separating the metal from the non-metal and then separating the different kinds of metal.
First, the scrapper will run the materials through a very strong magnet. Ferrous metals, those containing iron, are magnetic and nonferrous metals are not. Therefore, they are easily separated. Next, the scrapper will separate the different kinds of non-ferrous metals. These take more time to differentiate, but they are the most valuable metals.
Once everything is separated into its different kinds of metals, it will be sold to a smelter as raw materials. The smelter will melt the material down and sell it again as raw materials to be used for construction. For this reason, when a car is going to be completely scrapped, it typically only has value based on its weight in raw materials.