What is a Salvage Title?

Last Updated on October 4, 2023

Buying the right car starts with finding a good deal, but what if the right car came in the form of a salvage title? Many people have the experience of getting a car, but less people know how to find the best deals. Even fewer people realize the merit of saving money by getting a salvage title vehicle. With some know-how and some willingness, you can not just save money, but a surprising amount and still get a good car!

Buying a salvage title car may sound confusing and intimidating at first, but we’ve outlined everything you should consider, from cost to insurance to how you can make the most of owning such a car.

The Meaning of a Salvage Title

What are salvage title vehicles? Simply put, a car with a salvage title has been deemed a “total loss.” That means the cost of repairs would be more than the value of the vehicle, as deemed by the insurance company. This seems straight-forward, but the devil is in the details.

There are many reasons for a car to be determined a “total loss,” including flood damage, fire, hail, or the deployment of safety features such as air bags, and in some states, theft. To make things more complicated, each state has its own guidelines for determining what constitutes a totaled car. Therefore, what is a “total loss” may not be the same from state to state.

Now, you may be thinking, “Hold on, if the car was totaled, why should I buy it?” 

The answer is that just because vehicles have earned the salvage title label doesn’t necessarily mean they can’t be driven. Most won’t have low mileage, many could require costly repairs, but select used cars are still in good shape.

If your interest has been piqued, but you’re still not ready to buy salvage cars, then here are some benefits you can expect.

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 one could be beneficial to you.

1. Cost

A salvage title vehicle that has already been fully repaired could sell for a significant amount less than a car with a clean title. You can easily save thousands of dollars. The most important thing to consider is whether the repairs were done by a qualified professional. Sometimes, dealers rush repairs so that they can quickly sell the used car for maximum profit. You can verify repair quality by looking into the car’s history.

2. Cheap Insurance

Though some companies will not cover salvage titles, if you shop around, eventually you’l find one that does. And since the car is devalued in the eyes of the insurance company, that means you will receive a lower premium to cover the car. In the end you’re spending less money to buy the salvage title vehicle and less to insure.

3. No Resale

This might seem like a negative at first, but it means you can maximize use of the vehicle. in other words, 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 or a similar accident 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. They’re also afraid that putting too many miles on this car will lower the value for resale. By using a salvaged vehicle for day-to-day driving or messy jobs that could cause damage, you avoid extra wear-and-tear on your family vehicle and increase your resale profit on it for a year or two down the road.

5. Rebuild It Yourself

If you’re a hobbyist or professional mechanic, buying a salvage vehicle 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.

5 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, there is still 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. More than likely, once you buy a salvage vehicle you will be the owner for the rest of that car’s life.

2. Harder to Insure/Finance

Always, always, always contact your insurance company before purchasing a salvage title. While there are companies out there that will cover them, your primary auto insurance provider may not. If they do provide coverage in some degree, you likely won’t find comprehensive coverage. Insurance companies are often wary of salvage titles because of the vehicle’s history. Determining the true value of the vehicle can be very difficult. In addition, this means that banks may be reluctant to offer an auto loan for the car. Many people pay cash upfront for this reason.

3. Hidden Damage

With insurance already being difficult, you don’t want to incur a ton of repair costs. Damage is one of the biggest risks with a salvage title, particularly in the cases of flood or fire. Extensive damage will be obvious. However, if the vehicle’s damage appears minor, keep in mind that 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. That way if major repairs will be needed, you can plan accordingly.

4. Safety

Money is important when you buy a car, but so are safety concerns. What you save on a salvage title means nothing if your vehicle isn’t safe. There’s no reason to buy something that endangers you or the 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 could skimp on repairs to increase their profits.

5. Fraud

Since states judge salvage titles differently, beware of “title washing.” This means transferring a car across state lines to take advantage of more lenient laws. A salvaged car with significant damage could be resold under a clean, new title in a new state; or with mileage that may have been tampered with. It’s extremely important to check out the vehicle history report.

5 Tips for Buying Smart

Now that you know some benefits you can expect and some issues to watch out for, you’re almost ready to buy a car. Let’s review a few tips for putting money on a salvage title.

1. Contact the DMV

This should always be the first thing you do when considering a salvage title. States sometimes use different vocabulary such as “rebuilt,” “totaled,” “reconditioned,” or “junked,” instead salvaged. All of these terms are examples of a branded title. States also print the vehicle’s title on different colored paper. Moreover, as you go through the process, in some situations, depending on where you live, you could be required to hold a salvage license in order to buy 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 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.

4. Contact Your Insurance Company

There’s no use in buying a vehicle that you can’t insure. 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.

Conclusion

From cost to insurance, to making the most of your salvage car, these vehicles can be a great investment when you’re looking to buy a used car. Though, they do pose a few more risks to consider and require you do a little extra homework. But when you play your cards right, they can be very dependable and save you a lot of money.

If you’re ready to start looking for cars on auction, then have a look at what automotive thrills Municibid has to offer!