What is Salvage title? Buyer Tips Car Insurance

Can I Buy a Flooded Car and Then Fix it to Obtain a Title in Louisiana?

By Mike Richards Updated: 08/23/2022 Posted: 04/06/2017

Over the past several years, Louisiana has been decimated by various natural disasters, and tens of thousands of flooded cars have flooded the market. Owners of flooded cars who need their cars to get to and from work, and who have no other form of transportation, can apply for a modified title that makes the car temporarily legal to drive. In most cases, however, flooded cars are declared a total loss by the insurance company. They’re assigned a salvage title that can significantly lower their resale value, assuming they are able to be sold at all.

It is possible to buy a flooded car in Louisiana, and then fix it to obtain a title. The process, however, is not an easy one, and can even result in a financial loss.

What You Need to Know About Flooded Cars

It’s just a little water, right? Think again. Even a few inches of water can cause catastrophic harm to a car. From rust to flooded engines, the damage can be expensive to fix. In Louisiana, a car has to be salvaged out if the cost to repair it exceeds 75% of the car’s potential resale value, or if the car has been flooded. The reason for this is simple: it’s not always possible to judge the extent of damage to a vehicle based on appearance alone. A car can look fine and be unsafe to drive. Or it can look terrible and be perfectly fine. Only a skilled mechanic can tell you where your car falls on this continuum.

Because floods are common in Louisiana, and because cars caught in rainstorms can be flooded, flooded cars are a serious problem in the local car market. It’s not just salvage or flood-marked cars that have flood damage. Some unscrupulous dealers attempt to pass off flooded cars as merely used cars. Don’t fall for this trick. Request a vehicle history report on each and every car you buy, and only make purchases from dealers you know you can trust.

Is It Legal to Sell or Drive a Flooded Car?

It’s perfectly legal to sell a flooded car, so long as you disclose the flood history. What’s not legal is to drive the car to another state, register it in an attempt to seek a clean title, and then sell it without disclosing its prior flood history. This crime is known as title washing and can get you prosecuted for fraud or subject you to lawsuits.

It is not legal to drive a flooded car without a title. You’ll have to register the car as a salvage vehicle first, and salvage vehicles cannot be driven. This is one of the many reasons that salvage vehicles tend to be cheaper than other cars.

Making a Car Street Legal With a Rebuilt Title

For a flooded car to become street legal, two things must happen: first, you must rebuild the engine to meet Louisiana’s standards, and second, you must register the car as a rebuilt title. A car with a rebuilt title can fetch more on the open market, since the rebuilt title serves as proof that the car has been at least partially repaired. However, because a rebuilt title indicates that the car was once a salvage vehicle, the car will still be of a lower value than a similarly situated used car.

Title rebuilding can be a long and expensive process, particularly if the car has suffered extensive damage. It’s vital to know exactly what needs to be repaired before you take the plunge. Otherwise you could lose money.

Tips for Profiting from the Purchase and Sale of Louisiana Flooded Vehicles

Buying and selling flooded vehicles is both an art and a science. It requires significant trial and error. You won’t successfully sell every car, and not every car will command a high profit. Nevertheless, a few strategies can help you maximize your odds of a good return on your investment:

  • Know the market, and know which cars are likely to command a high value. Collector’s items and hard-to-find cars are valuable even as rebuilt titles. Cars that are readily available or that are low value are unlikely to earn you much of a return on your spending.
  • Form a relationship with a mechanic you trust, who can tell you the cost to repair a car and whether a car is worth the investment.
  • Get involved in your local dealer community, including online forums. These peers are a ready source of information about all things related to buying and selling salvage cars.
  • Always demand a full vehicle history report, and inspect that history carefully. This is the only way to know for sure what a car has been through and whether or not it can be repaired.
  • Invest in a dealer license. This opens access to high value auctions, and makes it easier to profit from sales.
  • Don’t allow a competitive spirit to get the best of you. It’s tempting to overbid at an auction just to win, but set a budget in advance and stick with it.
  • Pay only in cash. Most lenders will not finance a flooded or salvage vehicle. Even if they will, borrowing money for a car with an uncertain value and unclear future is a recipe for financial woes.