What Is a Car Salvage Title?
When an insurance company deems your vehicle a total loss, you may receive a salvage title. This car title indicates that your vehicle has been badly damaged, usually after a major auto accident.
The insurance company has deemed the cost of repairing the vehicle to be higher than what the car is worth. While an insurance provider sometimes takes the vehicle to repair, rebuild, or resell after paying out your damage claim, there are some cases in which the owner can keep the vehicle. In this case, you’ll receive the new title.
Laws vary from state to state, but there are a few things you need to know about owning a car that has a salvage title. To understand the status of your car, you need to know what a car salvage title is and how it affects your insurance premium, driving habits, and chances to resell the vehicle at some point.
What Does a Salvage Title Mean?
A salvage title indicates that your vehicle, in its current state, has little financial value. This is often the result of damage caused by an auto accident, but this isn’t always the case.
For instance, a flood or fire may damage a car beyond its value. Some salvage titles are the result of a car being stolen and vandalized or even having some parts stolen.
Some special cases do exist. For example, your car may have a salvage title if a driver used it as a taxi or a law enforcement vehicle. The same applies to some vehicles that were returned under warranty or have already been remanufactured or rebuilt and sold.
If you own or buy a car that has a salvage title, you need to know exactly why it has this type of title.
Can You Buy a Car with a Salvage Title?
Yes, you can buy a salvage title car. In fact, you will likely find that the cost of doing so is low. If you’re short on cash or aren’t able to get an auto loan, you may find that buying a car with a salvage title is a fantastic deal, so long as you know why the car has this title and that it’s safe to drive.
There’s one catch. You won’t be able to use an auto loan to buy a car with a salvage title. If you need some cash to cover the costs of the car, you may instead need to take out a personal loan.
This could come with a higher interest rate and higher monthly payments, but it’s an option if you have no other way to purchase a car.
Is It a Good Idea to Buy a Car with a Salvage Title?
Buying a salvage title car can save you money, but it also comes with some significant risks. For many reasons, people don’t want to buy cars with salvage titles. These are some potential consequences of buying a salvage title vehicle:
Financing Difficulties
Banks and other financial institutions are usually reluctant to finance salvage vehicles. For one, salvage title cars have no Kelley Blue Book value, and they can be difficult to price. If you get a personal loan, it will likely have high interest, and you’ll have to pay it back sooner than you would a traditional car loan.
Little Insurance Value
An insurance company isn’t going to cover much damage because the vehicle is already considered a low-value car.
Salvage title vehicles won’t get a high payout if they’re involved in an accident, and you may end up paying more in insurance than you would for other vehicles. Plus, these cars might not have the safety features, like manufacturer’s airbags, that the insurance provider considers safe.
This means that your salvage title car isn’t eligible for an extended warranty either. You’re buying a salvage vehicle as-is, which means, you’ll be responsible for any necessary repair costs.
Mysterious Vehicle History
When you buy a car, you should be familiar with the vehicle history report, including how many auto accidents it’s been involved in. If you don’t know how reliable or safe the vehicle is to drive, you’re putting yourself and your passengers at risk.
Additionally, you may not know if the previous owners maintained the vehicle properly. The vehicle could have a history of missed oil changes, which means that it’s already at higher risk for a breakdown.
Difficult to Sell or Trade
Salvage title vehicles have little value, especially if you decide to trade in your vehicle and get a new car later.
A dealership isn’t likely to accept a car with a salvage title due to the risks and low value. Some used car sellers may be willing to take a salvage title car for parts, but this complicates the process.
You may struggle to sell your car to a private party, as well. When a buyer is looking for a car to drive away in, a salvage title could deter them from buying a vehicle.
Safety Concerns
While many cars with salvage titles are safe, you can’t be certain of this. Repairing or rebuilding a salvage title car without a qualified mechanic or a professional inspection can lead to additional safety issues. Many rebuilt cars come with unsafe airbags, for example.
Likelihood of Future Repairs
Finally, there’s a chance that your vehicle will need more repairs in the future. For example, newly replaced doors may not align properly with the rest of the car. You may find that the car shifts over time and you need to pay to repair the door once again.
Tips for Buying a Car with a Salvage Title
If you choose to buy a salvage title car, a few tips will help you find a car that’s safe. In fact, these tips are useful if you’re buying a used car with a history you aren’t familiar with:
Understand Title Washing
First, you need to know that some sellers may try to do something called “title washing.” This term refers to hiding a vehicle’s damage and its real title status. Some sellers will do this to get a better price for a rebuilt car if they didn’t go through the required process to change the vehicle’s title.
The best way to avoid being a victim of title washing is to get an official car history report from another party so you can check for yourself. No matter which car you buy, look over the car’s history to see if the car was involved in an auto accident, vandalism, flooding, or other serious events.
Take the Vehicle to a Mechanic
Mechanics know how to recognize the signs of a vehicle with a salvage title. For instance, they’ll look for signs of replaced parts that didn’t come from the factory.
They’ll also look for paint that doesn’t match the rest of the car, misalignments, doors and windows that don’t close correctly, and faulty electrical components. If you weren’t told that this was a salvage title vehicle, a quick checkup will reveal the truth.
Even if you know that the vehicle has a salvage title, consider having a mechanic look over the car anyway. The mechanic can provide a recommendation about the safety of the vehicle and whether you should follow through with the transaction. Additionally, they can advise you about issues that are likely to go wrong with the vehicle in the future.
Ask for the Original Repair Estimate
If you’re aware of the car’s salvage title, you should still ask the seller for the original documents from the car’s repairs. This will help you determine exactly why the car has the salvage title so you can be aware if there are problem areas that will require your attention later.
Contact Your Auto Insurance Company First
Don’t commit to buying any salvage title car without contacting your insurance company to determine if the car can be insured. Get an insurance quote before you buy the car to make sure that you’re really saving money and buying a car you can drive safely and legally.
What If You Buy a Salvage Car Without Knowing It?
Some buyers don’t realize that they’ve purchased a salvage title car until they try to insure the car. If somebody sells you a car with a salvage title and you don’t realize it until after the transaction, you may have legal recourse. You have the right to know the title status of a vehicle before you purchase the car.
The first step you need to take is to contact your state’s consumer protection office for guidance. They’ll connect you with resources that help you stay informed about your options.
You may then seek guidance from a legal professional who handles cases similar to yours. The most important step after hiring a lawyer is to keep a paper trail of everything. Make sure you have all documents from the sale of the vehicle as well as all contact you’ve had with the seller.
Can You Insure a Vehicle with a Salvage Title?
If you do buy a salvage vehicle, it’s possible (but not easy) to get auto insurance. The catch is that your vehicle may not be eligible for collision or comprehensive insurance. You may only be able to buy a liability policy, which covers any expenses for accidents or damage to other people, their property, or their vehicle that you’re considered at fault for.
Your car may be subject to an inspection and appraisal before your policy goes into effect. Additionally, you may have to pay more for the liability policy than you would if you had a car with a clean title.
If you are able to obtain full coverage for your salvage title car, you should also be prepared for a lower payout than you would receive from a car with a clean title. Your car isn’t going to be worth as much as a vehicle with a clear title, even if it was otherwise in good condition.
What Is the Benefit of Buying a Salvage Vehicle?
The biggest benefit to buying a vehicle with a salvage title is the cost. Some people can purchase reliable salvage title cars at great prices, especially when the damage to the vehicle was purely cosmetic or if the car has been rebuilt. If you can buy a car and ensure that everything under the hood is pristine, you could have a reliable vehicle that lasts for many years.
You should also consider buying a salvage car if you’re a mechanic or are trying to learn to do your own auto repairs. Salvage titles are often excellent project cars. You’ll have a low-value car that you can learn with, which is much less risky than working on a vehicle with a clean title.
Should You Keep a Car with a Salvage Title?
If you already own a car and your insurance company informs you that it will have a salvage title, you may be uncertain about what to do with it. If you keep the car and receive a payout from your insurance company, you’ll have to pay for the car’s repairs on your own.
For some car owners, keeping the car is a good thing because it allows them to avoid buying a new car. If your salvage title vehicle requires just a few repairs to run safely, you might want to keep it instead of paying for a new vehicle. It could simply be easier for you to keep this car if you only use it locally or if the damage is largely cosmetic.
You can always choose to keep the salvage title vehicle and rebuild it so that it’s safe to drive again. If you take your car to the mechanic, they may be able to fix it so that it looks and runs almost as good as new. This can be more affordable than buying a new car.
Can You Clear a Salvage Title?
Generally, it’s not possible to completely clear a salvage title. If you have a salvage title car, it will likely never have a perfectly clean title again. This shouldn’t be discouraging news, however.
Instead, you can have the vehicle repaired and inspected by the state motor vehicle agency so that it gets a rebuilt title. While you won’t exactly have a salvage title on the car, potential car buyers will see that the new title isn’t necessarily pristine.
Nobody wants to receive the news that their car has a salvage title after an accident or other destructive incident. For many people, this means buying a new car and possibly losing money. When you understand what it means to own a salvage title car, you can make educated and safe decisions.
Hearst Autos Research, produced independently of the Car and Driver Editorial staff, provides articles about cars and the automotive industry to help readers make informed purchasing choices.
