Pros and Cons of a Salvage Title Car

Abandoned Car on farm in Texas
Paul Souders/Corbis Documentary/Getty Images

Everyone is looking to save money, now more than ever before. At least it seems that way. Cost-conscious car shoppers have always been on the lookout for good used vehicles, but the tough economy has made finding a real bargain that much harder. If you are having that problem, maybe it is time to dig in a little deeper: consider a salvage title vehicle

A salvage title car has been substantially damaged (usually in an accident), deemed a total loss by the owner’s insurance company, and had its title “branded” as a salvage.

 Typically, the owner has been paid off and the car’s title is in the hands of the insurer, which wants to get rid of it. Here’s where you come in. You have had a look at a salvage vehicle and, at least from the outside, the damage does not look too bad. You are thinking that it may be repairable. But before you lay out the cash, you need to consider these pros and cons to purchasing a salvage title car.

The Pros of a Salvage Title

• The price is right.

Alright, there really is only one “pro” here, but it’s a big one: you can save a whole lot of money. Being the frugal person that you are, this is, of course, your main reason for buying a salvage vehicle. Salvages are relatively cheap, sometimes selling for pennies on the dollar. And you see the potential where no one else does. That potential comes in two forms. First, you may be looking at that salvage vehicle as a treasure trove of spare parts.

Many car buffs buy salvage cars just for that reason. Second—and more in line with our discussion here—you may want to repair the vehicle to use as an inexpensive, run-out-to-the-home-store type of ride. Here’s a secret. While in most cases insurers total out vehicles because they are beyond repair, sometimes they do it for other reasons.

Perhaps they simply did not look closely enough at the damage before making their decision. Either way, you’re that one that stands to gain.

The Cons of a Salvage Title

• The price is wrong.

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 costly repairs, before purchasing it. Sometimes the damage can be extensive but not easily detected. 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. 

• A salvage is forever.

Once a vehicle is totaled out and branded as a salvage, that brand remains on the title forever. That’s 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 have to have it inspected and approved by the DMV to legally operate it on the road. Your title will then be rebranded as a “rebuilt,” but everyone will still know that your car was once a salvage vehicle. And while that is 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 have put into it.

 

• Insurance will be a huge hassle.

Many insurance companies are wary of writing collision or comprehensive policies on rebuilt, formerly salvage 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 had the vehicle branded salvage in the first place. In addition, your vehicle was once deemed not fit to drive on the road, so the changes of it breaking down again, or breaking down and causing a serious accident, are much higher than for a normal vehicle.

Some insurers have concluded not to try and simply will not write a policy. Those that dp are likely to charge you an arm and a leg. So, if you are considering fixing up a salvage title car, shop around for an insurance carrier before investing your money.

If you already have a vehicle and this would be your second or third, talk to a reputable insurance provider, it may be easiest to speak with the insurance agent you already know and trust.

On Balance

Is purchasing a salvage title vehicle worth it? It all boils down to the amount of time and money you’re willing to invest. If you like the idea of working on a banged-up car, fighting with insurance companies, subjecting yourself to mounds of paperwork and hassle—and if you like the idea of potentially saving a lot of money—then maybe a salvage title vehicle is for you. Just make sure that you know what you are getting yourself into before taking the plunge. Otherwise, it’s definitely not worth the headache.