Salvage headlines are more of a term we hear in the used truck market as weather phenomena like tornadoes, hurricanes, and floods cause significant damage to rigs across the country. The salvage title indicates that the car has suffered considerable damage before. If you’re looking for a cheap car, if you know what you’re looking for, even though you may not have insurance, a salvage title car might be a good option. This is not a project for newbies or looking for a trouble-free car.
What is a salvage title?
Salvage titles usually indicate that the car has significant damage that is close to or exceeds the value of the car. While specific requirements vary from state to state, there may be some overlap.
For example, Minnesota salvage title rules state that salvage title is required in every situation.
- After paying the total loss claim, the insurance company purchased the damaged vehicle.
- The damage to the car exceeds 80% of its value, and the owner has self-insurance.
- Salvage ownership of the vehicle comes from another state.
The regulations in New York are the same, except the repair must be at 75% or more of the car’s pre-damage market value.
In several states, salvage title cars cannot be driven on public highways.
Find out what constitutes a salvage vehicle in your state by contacting your state transportation agency or motor vehicle department.
It’s important to know that cars can be counted toward the total for reasons other than accidents. Other severe disasters such as floods, fires, vandalism, theft, and hail storms can also result in damage to salvage titles, depending on the state.
various types of damage
However, cars with salvage titles don’t always have accidents. There are many reasons why a car might receive a salvage title.
- Flood Damage: Cars damaged by flooding may receive a salvage title. Some jurisdictions specifically mention flood damage on the car’s name, while others just use the term “salvage title.”
- Hail Damage: Similar to flood vehicles, hail-damaged vehicles can receive salvage title if the state does not include specific “hail damage” instructions on the paperwork.
- Theft Recovery: If the vehicle is stolen and left for an extended period, the insurance company will reimburse the vehicle. If the vehicle is eventually found, the insurance company may sell it to a salvage operator, who will repair any missing parts. Some states will then offer salvage titles to cars.
- Vandalism: If the vehicle is painted or overturned and sufficient damage is done, the vehicle may receive a salvage title. However, none of the states named vandalism in the title — only “salvage.”
- Unrepairable: A severely damaged and unserviceable car, with no resale value other than its parts, may be designated as “unrepairable,” which some jurisdictions refer to as a “garbage truck.” In these extreme cases, the state will not allow car recovery. Also, it must be scrapped or destroyed. “Unrepairable” isn’t a salvage title per se, but it’s important to understand the term just in case.
The process of salvaging property rights
Salvage title protects consumers from inadvertently buying a car with major damage or other problems. Many jurisdictions have laws requiring anyone selling a vehicle with a salvage title to disclose this information. You may not even be able to test drive the car before buying.
The National Motor Vehicle Ownership Information System (NMVTIS) records salvage vehicles for the entire car to prevent buyers from unintentionally purchasing salvage vehicles. You can obtain NMVTIS vehicle history reports from one of the following authorized data providers:
- bumper net
- Check thatvin.com
Before you can drive a vehicle with a salvage title, it must be repaired and made roadworthy again. Record repairs so you can show proof of completion when you apply to rebuild title. The state inspects your car during the application process; if it passes inspection, you will be given the title to rebuild or rebuild.
If your vehicle has a salvage title, you have three main options. First, you can choose whether to keep it, fix it, and apply to rebuild the title. You can sell it as-is to someone willing to restore it. Finally, you can sell your vehicle to a junkyard as scrap.
Is salvage ownership a bad thing?
Buying a car with a salvage title can be risky if the car has not been properly repaired or rebuilt. If the car has been repaired, states usually require “re-ownership” and inspections. This is to prove it can hit the road again.
However, your security may still be compromised. If the previous owner repaired the car’s exterior but not critical safety features like airbags, you could be seriously injured in an accident.
Even if the car has been completely rebuilt, it may not be repaired. If there is severe frame damage, you may find that the door is not closing properly or the window is not sealing properly.
You should also pay attention to “shampooing”. A title wash is the unauthorized removal of a vehicle’s brand ownership status. Dishonest auto suppliers may apply for a new title for salvaged vehicles in different states, or omit information in new title applications.
Should You Buy a Salvage Title Car?
It all depends on how comfortable you are buying a car with a dark history. On the one hand, salvaging a title car can be a good deal if you’re on a tight budget or need a spare vehicle. Depending on the vehicle, salvage title cars can sell for 20 to 40 percent less than cars with clear title, according to Edmunds pricing manager Richard Arca. He further stated that when the market demand for salvage title vehicles is low, the price cut is even greater.
On the other hand, some salvaged title cars may be more prone to mechanical failure and have lower resale value. Binder recommends that consumers take the following three actions to help reduce the chance of buying a failed car:
#1. Check the vehicle
If you’re considering buying a car with a salvage title, one of the most critical things is to get it checked. Take a mechanic to check. You can also arrange to have the car towed to a body shop. Automotive professionals will be able to tell if the repair was done correctly and will be able to see any red flags, such as frame damage or parts that still need repair.
#2. Buy a vehicle from a respected repairer:
Look for internet reviews of facilities that sell vehicles. Buying a salvage-title car from a shop known for reliable repairs can be more dangerous than buying from someone with no record.
#3. Request an original repair quote:
An initial repair estimate is the best way to determine the extent of damage to a car. This will reveal which parts were replaced and the severity of the accident, if any. Maybe the damage happened another way.
Disadvantages of getting a salvage title car
Salvaging a title car can present challenges when it comes to getting a car loan, getting auto insurance, and reselling the car.
#1. You may not be able to get a car loan:
Banks and credit unions are reluctant to offer auto loans for salvaged title cars. They were concerned that a car considered a total loss could have reduced structural integrity and would not survive another crash. Another problem is that the car may require expensive repairs in the future that the borrower may not be able to pay, increasing the danger of repossession. Banks only want to fund vehicles that will last the life of the loan, and salvage vehicles have a bad reputation for durability. Banks are a little more lenient when it comes to hail damage, which is usually more of a cosmetic issue than a mechanical issue, but you may not get all the money you want.
You are better off applying for a personal loan rather than a car loan to avoid rejection.
#2. You will have to put in extra effort to get auto insurance:
According to Lynne McChristian, spokesperson for the Insurance Information Institute, you should be able to obtain the liability coverage required in most states for a salvage title car that has been rebuilt, repaired, and inspected. Because it has a salvage title, it’s riskier to insure, and you may have to pay more than a clean title car. “Keep looking around,” she suggested. “It’s a crowded market.” Liability insurance pricing is more likely to depend on your driving record than the vehicle’s history.
She expects that getting full crash coverage will be more challenging. This is because insurers cannot determine whether a vehicle meets the same safety standards as a car that was never declared a total loss. “It could be a statement waiting to happen,” McChristian speculates.
You will be less likely to trade in or resell. “Most franchise dealers won’t accept a salvage title car as a trade-in,” explains Arca, Edmunds’ pricing manager. “Your only options are to sell it to a private party or an independent dealer – they won’t pay you.”
#3. Determining the value of a vehicle is also difficult.
Most car review sites assume the car has a clean title, regardless of the condition level you choose. “Even a vehicle in ‘rough’ condition can have a clean title,” explains Arca.
Because you will almost certainly be selling the vehicle to a private party, we recommend that you use the price of the salvage title car as a starting point for sales negotiations. If you own the car for a few years, deduct a few thousand dollars. Test the market at a higher price than you’re willing to pay, then work your way down until you get the offer you want.
Finally, don’t try to hide the fact that your car has a salvage title. If you do this, you are committing fraud. Buyers will find out when you hand over the title or when the buyer receives the car history. Honesty is the best policy when it comes to owning a car with a colorful past.
salvage truck signs
While you should always check the car history and have a competent auto mechanic inspect the vehicle for faults, there are some signs that the vehicle is essentially a refurbished lemon and should be avoided.
Look for the following warning signs:
- On the title, most states require direct identification of cars in salvage conditions. First, request to view the headers.
- The vehicle’s paint peels off quickly or doesn’t match the rest of the vehicle (this may indicate that the seller is intentionally concealing the damage.)
- A Certified Auto Parts Association (CAPA) badge on any auto part or assembly may indicate that it has been repaired in an accident.
- Any misalignment of the wheels could indicate damage to the frame contact.
- Doors that don’t open or close properly may indicate that the vehicle has undergone extensive repairs (and was not properly repaired)
- If the hood of the vehicle is misaligned and not fully closed, it may indicate a major collision in the front and sides of the vehicle.
- If your vehicle’s electrical components are not functioning properly, especially if they flash intermittently, it could be a sign of severe flood damage.
Tips for Buying a Salvage Truck
To identify a salvage title car, it is best to do extensive due diligence on the purchase of a new car. In other cases, dishonest vehicle marketers may take vehicles to states with relatively lax salvage car ownership requirements, such as New York or New Jersey.
This procedure, known as shampooing, can mask defects in the vehicle for sale, cost buyers extra to purchase the vehicle, and result in unforeseen vehicle repair costs.
Stop the problem with a car history check, which includes information on any previous salvage titles associated with the vehicle. Vehicle history monitoring solutions, such as Experian’s AutoCheck Vehicle History Report, perform due diligence for as little as $24.99 per report for car buyers.
If you’re in the “serious” stage of buying a car, take your vehicle to a reputable auto repair shop before signing on the dotted line. A qualified mechanic knows where to look for potential car damage, when repairs have been completed, and how to identify any new or old parts installed that could indicate serious damage to the vehicle and cheaper parts that have replaced the original.
Alternatively, you can monitor the vehicle’s history using the VIN, which provides important information about the vehicle’s history, such as how many owners the vehicle has, ownership and accident history, and odometer readings when the vehicle changes owners. You can check your VIN through the free VINCheck service of the National Insurance Crime Bureau (NICB).
Due Diligence When Buying a Salvage Title Car
#1. Check original repair
Ask your insurance company for a copy of the original repair estimate for all work done on the salvage title car. This will give you a basis for determining how much damage the salvage title car has suffered, and may allow you to negotiate a lower purchase price.
#2. Investigate other auto financing options
Not likely to get a good auto loan deal for a salvage title car. That’s why you should also prioritize having a large cash reserve to reduce the need for auto financing.
You can also consider alternative financing options, such as a personal loan or a home equity line of credit, to finance a purchase at a lower interest rate and possibly for a longer period.
#3. Check your state’s lemon law purchasing options.
Some of the rebuilt cars have received a different, state-approved seal of approval in the form of “Lemon Act” used car sales. In this case, the automaker buys the repaired vehicle and resells it at the dealership. A growing number of jurisdictions have regulations in place that allow legal remedies for the purchase of vehicles with unresolvable repair issues.
Most state lemon laws require dealers to repair any defects in the car within a specified period at no cost to the customer or to fully reimburse the cost of such repairs.
If the auto dealer is unable to repair the vehicle within a reasonable time, under the state’s lemon law, the customer is entitled to a full refund of the purchase price of the damaged vehicle.
Your state’s Department of Motor Vehicles contains extensive information on state lemon laws, including an explanation of salvage titles and how to properly identify them. Below is a list of U.S. Department of Motor Vehicles organized by state.
What to do if you unknowingly bought a salvage title car
If you accidentally purchased a salvage title car and wish to cancel the transaction, you do have legal options.
To solve the problem of buying a salvaged title car without prior knowledge, follow these steps:
#1. Contact your state’s consumer protection office.
Your state’s consumer protection office can provide helpful advice on purchasing a salvage title car and help you seek a refund. Below is a list of US state offices.
#2. seek legal counsel
For a list of qualified attorneys in your area dealing with salvage title car issues, please contact the National Consumer Protection Association.
#3. Start a paper trail
Use your Buyer’s Guide to prove that a salvage title car is fraudulently sold. The Federal Trade Commission requires used-car dealers in the U.S. to provide new-car buyers with a buying guide for every vehicle in the lot, which includes warranty information in the event of a disagreement between buyers and sellers.
Salvage Title Auto Insurance
While salvaging title car insurance isn’t impossible, it can be more complicated — especially if you’re looking for comprehensive collision and comprehensive coverage.
Most insurance companies have liability policies for salvage-title cars, but they are often hesitant to include collision and comprehensive coverage. On the one hand, it is difficult to determine the exact value of a salvaged title car. According to the Kelly Blue Book (KBB), a salvage-titled car is typically 20% to 40% less valuable than a car with a clear title. If you file a claim on a salvaged car, you should expect to get much less “total damage” compensation from a “clean” car.
The second reason is to protect yourself. Salvage vehicles often have hidden issues that may or may not be addressed during the restoration process. Not all builders are honest, and it’s fairly common to use corners to increase profits. Any of these realities can lead to cars with structural and alignment defects that can lead to driving risks.
If you’re looking for salvage title insurance, here are some tips to help you get the best coverage:
#1. Look around.
Because about 20 to 30 percent of insurance companies won’t insure salvage title vehicles, you’ll need to shop around. Check with your existing insurance company to see if they offer coverage. If they don’t, you should go shopping.
#2. Ready for inspection.
Some insurance companies will require inspections and assessments before insuring a salvage-titled car. If you do not agree with the assessed amount, you should try to negotiate a larger amount or find new coverage. Even if an inspection is not required for insurance purposes, you should still do it. Ask a reputable mechanic to thoroughly evaluate the vehicle before purchasing.
#3. Get a repair quote.
If possible, get an original repair estimate from the repair shop or the insurance company that totaled the car. This provides your insurance company with a guarantee that all damages have been remedied.
#4. Expect to pay more.
Pricing varies by the insurance company, but you shouldn’t expect a discount on your salvage truck rate just because you got a good bargain on your purchase price. Some insurance companies charge up to 20% of the policy amount when insuring a salvage title vehicle.
#5. Consider getting incomplete coverage.
Consider purchasing a liability-only policy, which can protect you financially if you harm others or their property. It does not cover the cost of repairing your car. With a salvage title car, it’s easier (and less expensive) to get liability-only insurance.