Pros and Cons of a Salvage Title Car

Image by Jie En Lee © The Balance 2019

It seems that everyone is looking to save money, now more than ever before. 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 this problem, there is one way you can dig a little deeper: consider buying a vehicle with a salvage title

A salvage title car has usually been significantly damaged (typically in an accident), deemed a total loss by the owner’s insurance company, and had its once-clear 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, 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, consider these pros and cons to purchasing a salvage-title car.

Pros

  • Salvage cars cost significantly less than their clear-titled counterparts

  • You could get lucky to find one with minimal damage

Cons

  • You might overlook important damage when buying the car

  • The car may be costly or difficult to repair

  • You could have trouble getting insurance, especially comprehensive and collision coverage

The Pros of a Salvage Title

The Price Is Right

There is one big, obvious “pro” here: you can save a whole lot of money. If frugal is your middle name, 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 may see the 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. 

You Could Get Lucky

While in most cases insurers total vehicles because they are beyond repair after an accident, sometimes they do it for other reasons. An insurance company may agree to total a car as part of a larger settlement, to reduce a potentially large payout stemming from other medical or property damage claims being considered by the insured.

Or, perhaps the insurance company simply did not look closely enough at the car's damage before making their decision. Either way, after looking carefully at salvage-title cars, if you find one of these gems, you’re the one that stands to gain.

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 it. 

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. 

Once a vehicle is totaled and branded as a 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 have to have it inspected and approved by the DMV to legally operate it on the road. 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 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-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. In addition, your vehicle was once deemed not fit to drive on the road, so the probability of it breaking down again, or breaking down and causing a serious accident, are higher than for a vehicle that's never been in an accident.

Some insurers simply will not write a policy for you. Those that do 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 an 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, your comfort level, and your attention to detail. If you like the idea of working on a banged-up car (or have a really great, inexpensive mechanic who gets parts for cheap), spending hours searching for insurance companies, subjecting yourself to mounds of additional 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 may jsut become one big headache.

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