Should You Buy a Car If It Has a Salvage Title?
Learning the used car you’ve been considering has a salvage title is never good news, but you may be tempted to go through with the purchase anyway. After all, it’s a great price and the mileage on the odometer is low. What could go wrong?
Unfortunately, salvage title vehicles tend to be more trouble than they’re worth. If you do buy a car that has a salvage title, you’ll need to repair it before you can drive it, and you may have trouble getting car insurance or reselling it. You’ll want to do some extra due diligence to make sure there isn’t any major damage under the hood.
Here’s what you need to know about salvage titles cars, including the pros and cons of buying one and whether or not you’ll be able to insure it.
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What is a Salvage Title Vehicle?
The first time you see a listing for a salvage vehicle for sale, you may wonder, “What is a salvage title vehicle?” After all, it’s not a phrase you hear every day.
In short, a salvage vehicle is one that has been damaged in some way and has been written off as a total loss by the insurance company. The insurance company decided it wasn’t worth fixing and may have auctioned it off to a seller or dealership.
Every state has its own salvage title laws, which protect car buyers by requiring the seller to disclose the salvage certificate. Sometimes, a seller might engage in “title washing,” and cover up the salvage title by selling the car in a state with fewer regulations, such as New York or New Jersey.
That’s why it’s so important to look up the car’s VIN (Vehicle Identification Number) to find out its ownership history and the true value of the vehicle.
You can go to the National Motor Vehicle Title Information System to learn more, but you’ll need to use a third-party service like Carfax to get a vehicle history report.
Why Would a Vehicle Have a Salvage Title?
There are several reasons why a vehicle might have a salvage title, some of which are more of a problem than others. One possibility is that it was in an accident and suffered major damage under the hood. In this case, it may not be roadworthy, and you’ll need to make substantial repairs before you can drive it.
In other cases, the car wasn’t in an accident but was damaged by extreme weather conditions. Flood damage and hail damage are both common. If the damage is minor, you may be able to repair it more easily, but it’s a good idea to get a second opinion from a body shop to make sure there’s only cosmetic damage.
The third reason a vehicle might have a salvage title is because it was vandalized or stolen. Don’t worry — you won’t get in trouble for purchasing a stolen vehicle. Typically, the car was recovered after the insurance company had already paid it off, or it was stripped of its parts and considered a total loss by the insurer.
Pros and Cons of Buying a Salvage Title Car
Buying a used car with a salvage title can be a gamble. While you might get lucky and find a roadworthy car below market value, you may have to pay significant repair costs before you can drive it on public roads.
If the rebuilt vehicle passes a safety inspection, then your state’s Department of Motor Vehicles (DMV) can issue you a new title, but it will be a rebuilt title or branded title so any future buyers know that it’s a rebuilt car.
Let’s take a look at the pros and cons of buying a salvage title vehicle.
It has a low price. The main reason to buy a car with a salvage title instead of a clean title is because you may pay a lot less for the exact same model.
Still, we don’t recommend it for first-time car buyers who are looking for a bargain, only experienced buyers willing to take a risk on a damaged vehicle.
The damage may be minor. If you don’t mind cosmetic damage or you know a body shop that can fix it for cheap, the repair costs may be minimal.
This is common with hail damage, which can damage the exterior of the car but leave the engine intact. Flood damage, however, is usually a bigger issue.
It can be used for parts. Often, the best use of a salvage title vehicle is for parts. You can use the parts to repair another car, or just tinker around with it as a hobby.
It may need major repairs. The majority of salvage title cars have issues, and simply aren’t worth the hassle for everyday drivers.
If you aren’t an experienced car buyer, some types of damage can be hard to detect, and unscrupulous sellers may try to cover up the true extent of the damage.
It’s hard to finance or insure. Insurance companies may be reluctant to insure your car, even if you’ve rebuilt it and received a rebuilt title.
Lenders are unlikely to offer you a loan, and insurers may offer you liability insurance, but not collision or comprehensive coverage.
It’s hard to resell. Finally, salvage title cars have little resale value, and if you decide you want to sell it, you may have trouble finding a buyer.
Can You Insure a Car With a Salvage Title?
Now that you know what a salvage title is, the next question is: Can you insure it? The short answer is no. You can’t insure a salvage title vehicle, but you can insure a rebuilt vehicle once it’s passed a safety inspection and deemed roadworthy again. Even then, you may have a hard time finding car insurance for it.
Some insurers will sell you liability insurance to protect you if you get into an accident and damage someone else’s car. But they may not offer collision or comprehensive insurance on the rebuilt vehicle. After all, it’s already been written off as a total loss once, so they’re not going to pay for you to rebuild it again!
This may not be a problem if you’re keeping a rebuilt car for sentimental value and plan to leave it parked in the garage most of the time. But it can be a problem if you plan to use it as your primary car and drive it regularly.
If you find an insurance company willing to offer you collision coverage, they may limit the amount that they’ll pay out if you file a claim.
Find Car Insurance for Your Salvage Title Vehicle
Buying a salvage title vehicle can be risky because the cost of repairing it may be more than the car’s fair market value, and you may have a hard time getting a loan or finding car insurance. That said, if you’re an experienced vehicle owner and are willing to take on the challenge, repairing a salvage title car can be a fun side project.
It’s best if you know the previous owner and can ask them exactly what’s wrong with it, but you can always look up the vehicle history report to make sure the title is legit.
Once you’ve rebuilt the car, use our handy tool to compare car insurance quotes and find an insurance company that will insure your salvage vehicle.
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