Salvage Cars Buyer Tips

10 Tips for Buying a Salvage Car 

By Mike Richards 10/23/2015

Are you considering buying a salvage car? A salvage vehicle can actually be great value for money. However, you may have to do a lot of work in terms of troubleshooting, fixing, and insuring the vehicle. This means that you need to make some calculations to determine if you are saving any money by taking this route. If you value your labor at nothing, and you’re handy, a salvage car can be a good deal.

Here are ten tips that can help you decide whether or not to buy a salvage car.

#1. Consider the Damage

Usually, when a car is designated as “salvage,” it’s because it has been in an accident, and the insurance company has determined that the cost of repairing the vehicle outweighs its actual value. In some states, though, cars that have been damaged due to fire, flood, theft and hail, or those taken under repossession may also be designated as salvage.

In the case of damaged cars, you need to consider the severity of the damage. If it’s an older vehicle that has, for instance, had a fire in the interior, you might be able to fix it up with seats and carpeting that you get from a salvage yard, and you could end up with a perfectly usable vehicle.

Similarly, if there’s been a flood and the car is only damaged up to the level of the carpet, that could be an easy fix for you but a write-off for the insurance company if the vehicle is of a certain age.

There’s also “bad” crash damage and “not so bad” damage. Simple body damage can be fixed. But if the frame is cracked or bent,  you’ll never be able to fix it up to the point where it will pass an inspection.

#2. Consider What You Have to Spend Outside of Repairs

You will need to consider financing, warranty, and registration. Although it is very unusual for salvage vehicles to come with any warranty, some salvage dealers may offer a limited 30-day warranty. It will also be difficult to get financing to buy a salvage car.

Most salvage dealers will insist on cash purchases, and it is unlikely that a lending institution will agree to lend you money to buy a salvage car unless you have enough assets for a personal loan. Getting insurance coverage can also be problematic.

You will have to prove that the car is drivable, and even then you may only be able to get public liability and damage insurance unless you can prove that the vehicle has been restored to the point where it’s as good as any other vehicle on the road.

As to registration, many states require salvage cars to be inspected by a police officer or a licensed repair shop before they can be registered. Your state DMV can provide you with further information.

#3. Do the Math

When considering whether to buy a car declared as salvage due to damage, you need to think about the reasons why an insurance company would have made that decision. You should keep in mind that insurance companies weigh the value of the car against the cost of repairs.

This means that a newer car will be declared as salvage if it sustains serious damage, while an older car can be declared as salvage after having sustained only relatively minor damage, provided that the cost of repairing it surpasses the value of the car.

If you have a choice between a newer car that has sustained severe damage, and an older car with only some minor damage, the latter may be your best option. You need to consider the level of damage as compared with the Blue Book value on the vehicle. If a salvage dealer claims that a new vehicle has minimal damage, and you can get it for very little, that’s something that just seems too good to be true.

#4. Consider the Price

As a general rule of thumb, a salvage car that has been totally rebuilt is usually worth about 60% of the value of the same car if it had a clean title. So, if you’re considering a rebuilt salvage car, look at the Blue Book value. Multiply it by 0.6. If the asking price is lower, it’s likely a good deal. And if you’re bidding at auction, don’t go above 60%.

This calculation assumes that all the damage has been fixed, and that might not be the case. If all the repairs haven’t been done, and the vehicle isn’t 100% restored, deduct the cost of any repairs you’ll have to make from that value.

#5. Pre-Purchase Inspection

If you’re buying online, you may not be able to have a pre-purchase inspection done. But if you can, make sure that you use a mechanic that has no ties to the seller. An inspection can tell you what you’ll have to do in terms of repairs.

You might have to pay a mechanic to examine the vehicle, but this may very well save you money later. The seller may not list every issue, and your mechanic can identify problems. This could give you arguments to ask for a reduction in price.

#6. Post-Purchase Inspection

A post-purchase inspection may also save you money. Keep in mind that if you want to get a clear title on your salvage vehicle, it’s going to have to be rebuilt to road-worthy condition, and then inspected. It’s best to know what you’re getting into, and where you need to start.

#7. Repair Yourself vs. Buy Refurbished

Remember that you can buy two types of vehicles that have been declared as salvage due to damage – one that has been repaired, or one that needs to be repaired. It’s usually better to buy one on which the work has been completed, that has been inspected and licensed. You can often drive this type of vehicle away, once you have it insured, if all the other necessary paperwork has also been completed.

If, on the other hand, you’ve bought a salvage vehicle that you’re going to repair yourself, you have to make sure that the repairs are done to accepted standards. These standards can vary widely from state to state. Your state DMV can tell you which repairs are essential for you to get your repaired salvage car licensed.

#8. Consider Theft Recovery Salvage

This can be the best possible choice when it comes to salvage cars. Often, stolen cars are taken, trashed, stripped for parts, or burned following a joyride. Sometimes, though, they’re left virtually intact.

Legally, if a stolen vehicle isn’t found within a specific time period, usually three weeks to 30 days, depending on the state, the insurance company simply pays the owner the value of the car and writes it off. Then, if the car is found, it’s designated as salvage, despite it not necessarily having received any damage.

Even in this case, you need to make sure that the vehicle is inspected, if possible. There could be damage that isn’t visible.

#9. Get the Facts

If you’ve had your salvage car inspected, you still might not know much about the car’s history, so you should look into its past. Run the VIN (vehicle identification number) through Carfax and the National Insurance Crime Bureau.  You may be able to determine if the car has a salvage title, or if it was reported as stolen and not recovered. The VIN is usually visible through the windshield on the driver’s side.

#10. Know Where to Buy

Be careful where you buy your salvage vehicle. You can get great deals at online car auctions, and sometimes also from dealers. Ask around. Check out the car, the dealer, and the auction site. Visit the Better Business Bureau’s website to see if there are any complaints.

The Final Word

If it all looks good, go for it. Just make sure that you’ve done your homework, then you can place a bid, or buy the car, with some confidence, and remember to keep within your budget and understand the risks involved.

Find information on Rebuilt Title Laws for Each US State. Explore our Vehicle Auctions and find information on Buying With Us.

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