salvage auction
Salvage Cars

How Do Cars Get Salvage Titles?

By Mike Richards Updated: 02/15/2019 Posted: 02/11/2019

You have probably been in search of a new car at least once in your life. The process can be a time-consuming hassle. It includes spending days driving around visiting car lots, negotiating with car dealers and looking at hundreds of cars. If you decide to try using the internet, you end up looking at thousands of listings.

In those hours spent online, you must have come across auction websites advertising hundreds of thousands of cars at discounted prices. The majority of them will have some sort of salvage title. The price of these cars is appealing. However, you know nothing about salvage titles, what they are and how do cars get them. This article is here to help you with those questions.

What are Salvage Titles?

According to the Nebraska Department of Motor Vehicles, when an insurance company acquires a salvage vehicle through payment of a total loss settlement due to damage, a Salvage Certificate of Title must be issued in the name of the insurance company. In Nebraska, however, the previous vehicle owner can also retain ownership of the vehicle. In this case, the DMV has to enter a salvage brand onto the vehicle record.

A salvage title is the DMV’s branding of a vehicle that has sustained damage. This means the car, even if it is in driving condition, can’t be driven on the road legally. A salvage title may save you thousands of dollars on your used car purchase, if you play your cards right.

Title salvage

How do Cars Get Salvage Titles?

There are various reasons for a car to be branded salvage. Mostly this is because of the damage sustained in an accident, flood, an act of vandalism or theft. A salvage title is issued if the insurance company deemed the extent of the damage surpasses a certain threshold. In most states, this is around 75 percent of the car’s value at the time of the accident.

These thresholds may vary depending on the state. In Iowa, the insurance may pay out a claim on the car, or consider a car a total loss if the damage is estimated at 50 percent of the car’s value. But in Texas, the damage has to be 100 percent of the car’s price at the time of the accident.

But how does a car get in such a condition to be declared salvage? The main and obvious reason are accidents. If a car has been in a crash it had certainly sustained damage, and if the damage is above the write-off threshold, it is declared a salvage.

Floods, Vandalism and Theft

The same goes for flood damage. In this case, the car may not have much cosmetic damage on first look, especially if the bodywork was in a decent condition prior to the flood. But upon closer inspection, you may find mold, mildew, rust starting to eat away at the bodywork. Plus. there will be hidden electrical issues. That is a given, because wiring and water don’t go well together.

In other instances, you may find that the car that has been a target of vandalism. The car might have been spray painted or may have had its windows broken in and bodywork dented with a bat.

Then you have theft cars. If law enforcement officers don’t recover the car within a certain period, it is declared a total loss. The insurance company then pays the claim to the owner. But sometimes these cars get retrieved at a later date. It is not unusual that they are left in mint condition.

So, a car having salvage title branding does not mean that it is beyond any repair. There are plenty of uses for salvage cars. Rebuilding them to drive on your own or to sell them on can be a great way of earning some extra cash.

The Advantages Of Salvage Titles

Salvage Title Insurance Cars Auctions

Cars with salvage title branding will be advertised at prices 65 to 75 percent, on average, below the Kelley Blue Book estimated value of the equivalent car with a clean title. If a car has a salvage title, Kelley Blue Book will rate it as poor and not give out a value estimate on the car at all. This makes them a perfect spare time project for those who know their way around cars and don’t mind getting their hands dirty.

You can’t buy salvage cars everywhere. It is illegal to drive a car with a salvage title on the road before it is rebuilt and recertified. But if you are looking for a salvage car, auto auctions are the place to go. The reason why these cars get sold at auctions is that insurance companies are not interested in rebuilding or keeping them. The main goal is to sell the car for as much money as possible to recover as much of the claim/loss on the car as possible.

The price reduction is certainly a major sale point for salvage cars. But before buying one, make sure you inspect the car properly. If you are not capable of inspecting a car yourself have someone knowledgeable do it for you. Having an estimate of the damage extent and the repair costs plays a major role in the process of purchasing a car with a salvage title. Getting it for the right price means you can save thousands of dollars on it even after the issues with the car have been resolved.

So why are people not buying more salvage cars? Many don’t know salvage cars are, and not everyone has the skills to make them roadworthy again.

Buying a Salvage Title Car

salvage car

As noted above, you can’t buy a salvage title car everywhere. You need to buy at an auto auction. If you are a first-time buyer at an auction, you will quickly learn that these venues are very noisy and overwhelming. There’s the crowd, the engines running, people inspecting cars everywhere. And there’s the bidding going on with the auctioneer shouting numbers out loud.

Also, you have to find a car that looks interesting to you, inspect it and then wait for it to be put on auction. Bidding can be fierce if the car has attracted interest. And you may see a number of bids flying in, instantly pushing the price upwards. Often the bids will push it out of your budget.

When it comes to budgeting, research is key. The first thing you have to know is what sort of car you want to buy and why you want to buy it. You should have a specific reason for buying it. Once you have settled on a make and model, you have to know what options you require and what options you can do without.

But when you start searching for a specific car at an auction, you will immediately notice that this will take a lot of time, and pinpointing vehicles of interest is hard. This is where online auctions have an advantage.

The Advantages of Online Auto Auctions

Companies like Auto Auction Mall provide their clients, for a fair price, with access to a large number of auctioned cars. These include salvage title cars as well. You can easily browse the inventory of any auction. You can tailor your search to your preferences so that the results only show the cars that fit your requirements.

Another advantage of shopping online is that you have so many resources available at the click of a mouse. One of the most important aspects is the value of an equivalent car with a clean title. Go through online listings for the car you want and see how the prices stack up. Estimate the repair costs of your car, including spare parts, labor, and rebranding process. Add this to the purchase price of the car. This will be your budget. It has to come way below the price of the equivalent with a clean title to make it worthwhile.

Auto Auction Mall is a great resource for salvage cars. You get assigned an agent who will handle the bidding for you, within the budget you set. They can also assist you on picking up the car, settling the paperwork and auction fees. They can also help you with the delivery of the car from the auction venue to your driveway.

Rebranding a Salvage Title to Rebuilt Salvage

salvage cars

To get a salvage car back on the road, you need to it go through a recertification process. This has to be done by the rulebook. Otherwise, you will not be able to pass inspection and then insure and register the car.

When rebuilding your vehicle, you need to be meticulous. As we said above, the extent of the damage dictates the scale of repairs a vehicle needs. The important bit in the process is to either do the job yourself or, depending on the state you live in, have a certified rebuilder do it for you. If you are doing the job yourself, make sure you document the process thoroughly. Take photos of the vehicle before and after the repairs were done. Document all the changes made and file all the receipts you have received for the spare parts you had to purchase.

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Inspections and Paperwork

Once you have completed the rebuilding process, and before the car is painted, you have to file an application for inspection which has different designations in each state. For the exact name of the application, visit your Department of Motor Vehicles website. You will also have to file all the receipts as well as some other forms. Also, all documents need to be originals. If you are having the rebuild done by a certified rebuilder, they will complete these tasks for you.

Inspection can be done at the certified inspection station run by a state body. Alternatively, a certified private inspector can complete the inspection at your place. But this will certainly include a private inspector’s fee. You don’t have to pay a fee at a the state-run inspection station. The downside is that the wait time can be weeks.

You will be given a new document verifying that the car has passed the inspection. The next step is to file all the same documents, including the inspection report, to the Department of Motor Vehicles. You also need to file an application to change the car’s title from salvage to a rebuilt salvage. This will also include paying certain fees. Once the rebuilt salvage title is issued for the car, it can be insured and driven on the road.

salvage porsche

Insuring a Salvage Rebuild

Insurance is probably the biggest issue when it comes to dealing with salvage title cars, or rebuilt salvages. This is because insurance companies are reluctant to deal with cars that have previously been written off. Even if they are open for negotiation, they will rarely offer comprehensive coverage. If they do, the premium will be quite high.

But there are ways around this problem. First, you have to do some more research. Shop around to see which insurance companies are willing to work with you and which ones are giving you a reasonable quote. Bear in mind that the quote you get will be higher than it would have been if the car had a clean title.

But this is where the documentation acquired during the recertification process comes into play. Providing a clean bill of health to the insurance company may soften their stance. Additionally, you can seek to have the car inspected by a private inspector hired by the insurance company. These inspections can confirm that the rebuild process has been done properly. This also shows the insurance company that, in case you make a claim down the road, it will not be for an issue that was sustained in a previous accident or prior to recertification.

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