Buying a Car with a Salvage Title
- A salvage title car is a vehicle that was damaged to the point of “total loss.”
- Salvage title cars must be repaired and inspected before they are road-legal again.
- Financing and insurance for salvage titles can be difficult to get.
Buying a car with a salvage title may seem like a great deal, but beware. Salvage title vehicles can have serious safety issues from all the damage they’ve taken, and their maintenance, insurance and financing can end up being very expensive.
Make sure to educate yourself on the risks before you buy a salvage title car.
What is a salvage title on a car?
When a vehicle suffers severe damage, the insurance company may declare it a “total loss.”
The meaning of total loss varies by state. For example, in Iowa, repairs must cost at least 70% of the vehicle’s fair market value to be a total loss, while in Oklahoma, it’s 60% of the market value.
Vehicles that are declared a total loss end up with a salvage title. Sources of damage might include:
- Flooding
- Hail and other weather
- Fire
- Collision
- Vandalism
- Theft
Although you can buy a car with a salvage title, you can’t legally drive it until it’s undergone full repairs and an additional inspection by your state. So while the list price on a salvage title car may look tempting, these extra costs will make it more expensive.
Pros and cons of buying a salvage title car
While salvage title cars have some advantages, the cons are pretty heavy — take them seriously before making a purchase.
Pros
- The price is usually very low.
- Some damage, like hail, might not make the car unsafe to drive.
- A salvage car can be a good option for mechanics looking for spare parts.
Cons
- Getting used car financing for salvage titles can be difficult.
- Insurers may refuse to cover you or charge you a high premium.
- Even after inspection, the car may still have dangerous safety issues that are hard to detect.
- You may have trouble reselling your salvage title car.
Steps to follow before buying a salvage title car
If you choose to purchase a salvage title car despite the risks, here are some precautions you should take before signing any paperwork or paying any money.
1. Get the vehicle history report
Knowing the vehicle’s history is paramount. Depending on what kind of damage it suffered, you might want to pass immediately.
Start by looking up the vehicle’s title history with the National Motor Vehicle Title Information System. This will tell if a car has ever been declared a total loss and if it has a salvage title. But to learn the details of what led to the salvage title, you may need to go further and get a report from a research service like Carfax or AutoCheck.
2. Inspect any repairs and get a third-party inspection
While the seller may have done repairs, get a third-party inspection done by a mechanic you trust. With your safety at stake, don’t rely on the word of the seller, who might be desperate to unload their salvage title car.
3. Understand local title laws
Every state has its own rules about salvage title vehicles. Find out what the requirements are to get your car re-titled so you can drive it. This will include getting an inspection, which you must pay for.
Once a salvage title car has been fixed and inspected, it will usually get a “rebuilt” or “revived salvage” title.
4. Compare insurance policies
You can’t fully estimate the cost of a car before knowing how much it will cost to insure it. This is particularly important with salvage title car insurance, where many insurers are reluctant to cover you at all.
Compare quotes before you buy a salvage title car to make sure you can cover the monthly costs of owning it.
Alternatives to salvage title cars
While you can buy a salvage title car, fix it and get it street-legal, there could still be safety problems that were missed. Plus, the financial and insurance can be pricey.
If you want to save money but are wary of taking a chance on a salvage title car, some alternatives include:
- Certified Pre-Owned (CPO). CPO cars are used cars sold by dealerships that work with the manufacturer. They should have clean titles and also often come with some type of warranty.
- Used cars with cosmetic damage. Cosmetic damage, like a keyed paint job or a dent in the door, aren’t usually enough to cause a total loss. These can be a safer choice than a repaired salvage title.
- As-is vehicles from private sellers. You might find a good deal with a private seller, offering their used car in “as-is” condition. You’ll still want to have a third-party inspection done, but any repairs are likely to be much less than with a salvage title car.
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Frequently asked questions
Buying a salvage title car is risky business. Not only is the safety of the vehicle questionable (depending on how the car was wrecked), but costs like insurance and auto financing are likely to be much higher than with a regular used car.
Because of the safety dangers and the cost to finance and insure a salvage title car, they can often be a bad idea. But if the car was declared a “total loss” because of damage to the exterior — from hail, for example — it might be worth repairing and applying for a rebuilt title.
A “clean title” — when used in comparison with “salvage title” — means the vehicle does not have a history of major damage that would lead an insurance company to declare it a total loss. In other cases, “clean title” can mean the vehicle is fully owned by the seller, with no liens or other claims against it.
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