January 27

What is a Salvage Title?


Buying an automobile is something many people do within their lifetimes, but often, they don’t have much practice at making the best deals. When it comes to buying used vehicles, there’s more to it than just negotiating a price. Buying used means you’ve got to do more research.

When you’re not a veteran vehicle purchaser, it can be extremely confusing and exhausting to try and sift through unfamiliar vehicle terms. If you’re trying to save as much money as you can, you might even consider buying a salvage title. But what does that actually mean?

The Meaning of a Salvage Title

First, and most importantly, let’s discuss what a salvage title is. Simply put, a car with a salvage title has been deemed a “total loss” – the cost of repairs would be more than the value of the vehicle – by the insurance company. This seems straight-forward, but the devil is in the details.

There are many reasons that a car may be determined a “total loss,” including damage from accidents; hail; flood; fire; deployment of safety features, such as air bags; and in some states, theft. To make things more complicated, each state has its own guidelines to determine if a car is a “total loss,” so a car with a salvage title in one state may not be considered a “total loss” in another state.

Now, you may be thinking, “Hold on, if the car was totalled, why should I buy it?” Just because a vehicle has earned the salvage title label doesn’t necessarily mean that it’s undrivable. The Consumer Federation of America reports that each year, nearly 2.5 million cars are totalled and nearly 1.5 million of them are repaired and returned to the road. Many of these cars are a bit older and have already depreciated in value, so even damage from a minor accident could exceed the value of the vehicle, though they still operate well.

5 Benefits of Buying a Salvage Title

Once you realize that a salvage title isn’t a death certificate for a vehicle, there are several reasons why buying a one could be beneficial to you.

1. Cost

A car with a salvage title that has already been fully-repaired may sell for a significant amount less than a car with a clean title. You can easily save thousands of dollars by buying a salvage title. The most important thing to consider is whether the repairs were done by a qualified professional.

2. Cheap Insurance

Though some companies may not cover salvage titles, if you shop around, you’ll eventually find one that does. Because the car is devalued in the eyes of the insurance company, this means you will receive a lower premium to cover the car. Not only is the car cheaper to buy, but it will continue to save you money on your monthly insurance bills.

3. No Resale

This might seem like a negative at first, but it means you can maximize your own use of the car. You don’t have to worry about the value of the car falling because you won’t try to sell it later. For example, small cosmetic damage from backing into a pole won’t be a huge source of stress.

4. Ability to Use Two Cars

Many people buy one nice car for family trips, special events, and more; but they’re afraid that putting too many miles on the car will lower the value for resale. By using a salvaged vehicle for day-to-day driving or messy jobs that may cause damage, you can avoid extra wear-and-tear on your family vehicle and increase your resale profit a year or two down the line.

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5. Rebuild It Yourself

If you’re a hobbyist or professional mechanic, buying a salvage title not only saves you money, but gives you something to work on. Buying a car before it is repaired will save you even more money on top of the reduced price. When considering a buy, be sure you take the future cost of parts into consideration of the total price.

salvage title

Things to Think About When Buying a Salvage Title

Salvage titles do have a lot of advantages, but there are some things you need to consider carefully before buying.

1. Low Resale Value

While we think “no resale” is a benefit, it still comes with a drawback. Simply due to the salvage title label, many people will be scared away from purchasing the vehicle if you ever choose to try and resell it. It is very likely that once you buy a salvaged car, you will be the owner for the rest of that car’s life.

2. Harder to Insure/Finance

It is extremely important that you contact your insurance company before you purchase a salvage title. While there are companies out there that will cover them, your primary auto insurance provider may not. Insurance companies are often wary of salvage titles because of the vehicle’s history. It can also be very difficult to determine the true value of the vehicle. In addition, this means that banks may be reluctant to offer loans for the car. For this reason, many salvage titles are bought with cash upfront.

3. Hidden Damage

This may be one of the biggest risks with a salvage title, particularly in the case of flood or fire damage. Even if it appears minor, water and smoke damage can be difficult to detect and can cause major issues later. Be especially careful to have the electrical systems inspected by a professional.

4. Safety

It doesn’t matter how much money you save if your vehicle isn’t safe. There’s no reason to buy something that endangers you or your family. Be absolutely sure to have the vehicle inspected by your own trusted mechanic. Pay special attention to safety features, such as air bags and safety belts. Dishonest sellers may skimp on repairs to increase their profits.

5. Fraud

Because different states judge salvage titles differently, beware of “title washing.” This means transferring a car across state lines to take advantage of more lenient laws. Cars with significant damage may be resold under a new, clean title in a new state; or miles may have been tampered with. It’s extremely important to check the history of the car.

Buying Smart

Here are some tips to use when buying a salvage title.

1. Contact the DMV

This should always be the first thing you do when considering a salvage title. States may use different vocabulary, such as “rebuilt,” “totalled,” “reconditioned,” or “junked” instead of “salvaged.” They may also be printed on different colored paper. You may also learn that in some situations, you may be required to hold a salvage license in order to buy and/or sell salvage vehicles.

2. Physical Inspection

Check both the vehicle itself and the title for signs of tampering. This is always a good idea when buying a used car, but it goes double for salvage titles. Take pictures of any visible damage.

3. Check Records

There are lots of ways you can check the history of the vehicle, including service records and third-party websites like CarFax or AutoCheck. The National Motor Vehicle Title Information System is incomplete, but also may be helpful. For licensed dealers, check the Better Business Bureau. If the seller is unwilling to provide proper documents, this is a huge red flag.

salvage title

4. Contact Your Insurance Company

There’s no use buying a vehicle that can’t be insured. This step is absolutely necessary before the final purchase.

5. Negotiate Price

Because so many people are intimidated by salvage titles, it’s a buyer’s market. You should be able to negotiate any price down from the initial asking price. This is especially true if there are plenty of vehicles of your chosen make and model available with clean titles.

Salvage titles can be a great investment when you’re looking to buy a vehicle. Though they do pose a few more risks to consider and require you do a bit more “homework,” they can still be very dependable cars and save you a lot of money.


auto insurance company, buying used cars, DMV, salvage title, Vehicle History Report, VHR

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