Pros and Cons of a Salvage Title Car
Cost-conscious car shoppers are always on the lookout for good used vehicles. There's one option you may not have considered: buying a vehicle with a salvage title.
A salvage title car has significant damage (typically from an accident), has been deemed a total loss by the owner’s insurance company, and has had its title rebranded as a salvage. Typically, the owner has been paid off by the insurance company and the car’s title is in the hands of the insurer, who wants to get rid of it.
Here’s where you come in. You've found a salvage vehicle and the damage doesn't look too bad. You think that it may be repairable, but before you lay out the cash, consider the pros and cons of purchasing a salvage-title car.
You will spend less on a salvage car than a clear-titled one.
You could get lucky and find one with minimal damage.
You might overlook important damage when buying the car.
You might have to spend a lot to repair the car, and repairs might be complicated.
You could have trouble getting insurance, especially comprehensive and collision coverage.
The Pros of a Salvage Title
The cost might be the most obvious reason to consider a salvage title vehicle. Salvages are relatively cheap, sometimes selling for pennies on the dollar. And you may see potential where no one else does.
That potential comes in two forms. First, you may want that salvage vehicle because it's a treasure trove of spare parts, and many car buffs buy salvage cars just for that reason. Second, you may want to repair the vehicle to use as an inexpensive, run-to-the-store type of ride, especially if you have the desire and/or the means to repair cars at a low cost.
Insurance companies total vehicles because they feel the cost to repair the vehicle exceeds the vehicle's value. That doesn't always mean the vehicle is irreparable. There's a chance that the insurance company didn't look closely enough at the car's damage before making its decision or that you have cost-effective options for completing those repairs. If you look carefully at salvage-title cars and find a gem like this, you’re the one that stands to gain.
Sometimes the damage can be extensive but not easily detected, such as a bent frame, or electrical malfunctions due to flood damage. Unless you are an expert yourself, be sure to have a trusted mechanic look it over closely and sign off on it before you buy.
The Cons of a Salvage Title
You need to be very sure that you can fix a salvage car relatively cheaply, or can afford to sink a lot of time and money into the repairs, before purchasing one.
A Salvage Title Is Forever
Once a vehicle is totaled and branded as salvage, that brand remains on the title forever. This is true even if you return the car to working, running condition. In most states, once you get a salvage vehicle back to safe running order, you must have it inspected and approved by the DMV to operate it on the road legally.
The car's salvage title will then be rebranded as rebuilt, but everyone will still know that your car was once a salvage vehicle. And while that's better than having a salvage title, having a rebuilt title means a significantly lower asking price if you decide to sell the car later on, regardless of the time, effort, and money you've put into it.
Insurance Will Be a Hassle
Many insurance companies are wary of writing collision or comprehensive policies on rebuilt, formerly salvage-titled vehicles. The main reason is that if you get in an accident, the insurer can have a hard time figuring out whether the damage is due to the new accident or the one that resulted in the vehicle being branded salvage in the first place. Additionally, your vehicle was once deemed not fit to drive, so the probability of it breaking down again, or breaking down and causing an accident, is higher than for a vehicle that's never been in an accident.
Some insurers won't write a policy on a rebuilt salvage vehicle. Those that do are likely to charge you a high premium. If you're considering fixing up a salvage title car, shop around for an insurance carrier before investing your money.
Should You Buy a Salvage Title Vehicle?
Is it worth it? It all boils down to the amount of time and money you’re willing to invest, your comfort level with vehicle repairs, and your attention to detail. If you like the idea of working on a car (or you have a great, inexpensive mechanic who gets parts for cheap) and you don't mind taking the time to search for insurance companies, then a salvage title vehicle could be for you. Just make sure that you know what you're getting yourself into before taking the plunge. Otherwise, it may just become one big headache.
Vermont Department of Motor Vehicles. "Title Brands." Accessed June 7, 2020.
Autotrader. "Should You Buy Back Your Totaled Car?" Accessed June 7, 2020.
Kelley Blue Book. "Frequently Asked Questions: My Car's Value." Accessed June 7, 2020.
Allstate. "When Is a Car Considered Totaled?" Accessed June 7, 2020.
Michigan Office of the Secretary of State. "Rebuilt Vehicles." Accessed June 7, 2020.
New Hampshire Department of Safety Division of Motor Vehicles. "Salvage and Rebuilt Vehicles." Accessed June 7, 2020.
Autotrader. "Buying a Car: What's a Rebuilt Title?" Accessed June 7, 2020.
General Insurance. "What to Know About Insurance For a Salvage Car." Accessed June 7, 2020.