Definition and Examples of Salvage Titles
A salvage title is a type of “branded” title, which indicates that the vehicle had damage that the owner (or future owner) should know about. Typically, a branded title is clearly marked, so it’s easy to recognize.
You may also see a branded title marked “Rebuilt.” In many states, this indicates that a salvaged car was rebuilt and passed an inspection required for registration and licensing.
How much damage the car needs to get a salvage title varies. In New York and most other states, the damage must equal at least 75% of a car’s retail value. But in some states, such as Florida, a vehicle gets a salvage title if the insurance company decides the vehicle is a total loss.
A collision isn’t the only catastrophic event that causes a car to be given a salvage title. This can also occur if the car is stolen, or damaged by flood, fire, trespass, and other events.
How Do Salvage Titles Work?
Salvage titles protect consumers from unknowingly purchasing a car that has extensive damage or other problems. Laws in many states require that anyone selling a vehicle with a salvage title must disclose this information. You might not even be allowed to drive the car before buying it.
The National Motor Vehicle Title Information System (NMVTIS) tracks salvaged vehicles nationwide to keep consumers from unknowingly purchasing a salvaged car. You can get an NMVTIS Vehicle History Report through the following approved data providers:
Before you can drive a vehicle with a salvage title, you must repair it and make it safe to drive again. Document the repairs so you can provide proof of the work when you apply for a rebuilt title. During the application process, the state inspects your vehicle; if it passes inspection, you are granted a rebuilt or reconstructed title.
If you have a salvage title on your vehicle, you have three main options. First, you can decide to keep it, fix it, and seek a rebuilt title. You can sell it as-is to a buyer who is willing to repair the vehicle. Finally, you can send the vehicle to a junkyard as scrap.
Pros and Cons of Buying a Salvage Title Car
Might get lucky and find one with minimal damage
Can use it for parts
Might initially overlook important damage
Repairs could be costly
Could be difficult to acquire insurance
- Lower price: Since vehicles with a salvage title aren’t roadworthy, they typically cost at least 20%-40% less than a vehicle with a clear title.
- Might get lucky and find one with minimal damage: Not all vehicles with a salvage title are completely wrecked. You might find one with only cosmetic damage from hail. You might also snag an older vehicle with a low market value that was deemed a total loss even though it only costs $1,000 to fix.
- Can use the vehicle for parts: You can purchase a salvaged vehicle to get parts for another vehicle that you own. This will save you money on expensive auto parts and help you acquire hard-to-find parts. As a bonus, you may be able to sell the parts you don’t need.
- Might initially overlook important damage: When a car is damaged in a collision, you can’t always see the full extent of the damage. This means you can wind up with a car that looks easy to repair but ends up having more damage than you thought.
- Repairs could be costly: The car was declared salvaged for a reason. It needs repairs, and these repairs can cost a lot of money when you factor in parts and labor.
- Could be difficult to acquire insurance: Not every insurance company will insure a car with a salvage title. If you find a company that will offer you a policy, they may not allow full coverage. You might get stuck with a liability-only plan that won’t cover the damage to your car if you get in a collision.
- A salvage title indicates that the car has extensive damage and is no longer roadworthy.
- A salvaged vehicle that has been repaired and passed a state inspection might qualify for a rebuilt title.
- Buying a car with a salvage title might be worth the effort if you have the time and money to restore it. Just know that finding a loan for it may be difficult.
Frequently Asked Questions (FAQs)
Which banks will finance a car loan with a salvage title?
Some banks and title companies that finance cars with a salvage title are few and far between. Westlake Financial is one example of a financial institution that does. If your bank doesn’t offer loans for salvage titles, another option may be to apply for a personal loan or a loan through a credit union.
How much does a salvage title reduce a vehicle’s value?
Typically, a salvage title reduces a car’s value by 20% to 40%. However, the loss in value depends on the extent of the damage and repairs needed.
How do I tell whether a title is clean or salvage?
If a car is salvaged, the title should be marked or branded. If you don’t have access to the title, you can look at a car history report from an NMVTIS data provider.