You may have seen salvage cars for sale at auctions or in articles. You might have some idea as what this means, but is it bad to buy a car with a salvage title? What condition might it be in? can you get it back on the road? Once repaired, can you insure it? Let’s take a look at this section of the auto market.
This is a question that gets asked a lot in the private buyers’ circle. A lot of people would just assume that salvage cars are only good for spare parts. But the fact is the answer is not as easy as you would expect. Cars can get a salvage title for a number of reasons, and this means that the answer to the question depends on these reasons and the resulting condition of the car.
How a Car Gets a Salvage Title
There are several reasons why a car can get a salvage title. The most common reason is damage resulting from an accident. This means that, for the most part, cars that get a salvage title are those that have been written off by the insurance company after the car sustained damage, typically in an accident.
Usually, the insurance company assesses the damage and decides whether it is better to pay the car’s value to its owner or pay for the repairs. In may vary from state to state, and even from insurance company to insurance company. In some states, the percentage of the value of the car above which a car is declared a total loss is regulated by law, while others leave that assessment entirely to the insurer.
If the insurance company decides to pay for the value of the car instead of covering the costs of repair, it writes the car off, pays the money to the owner and then gets a salvage title for the car. These cars are then usually sold at auctions at very low prices, allowing the insurance company to recover some of the value. They also get a salvage title, meaning that they cannot be legally driven on the road.
But accidents are not the only causes for a car to get a salvage title. A car can get enough damage to be deemed a total loss if it was affected by flooding, a hail storm or some other natural disaster. Or the car can get a salvage title if it was reported stolen and law enforcement recovered the car only after the insurance company had written it off.
This means that the condition of a salvage car can vary widely, depending mostly on the specific cause of the damage. In fact, a stolen and recovered car can have very little damage at all. Furthermore, because the insurance company does its math by comparing the actual value of the car with the cost of repair, it doesn’t take a lot of damage for a relatively low-value car to be declared a total loss.
What You Can Do with a Salvage Car
From the mere fact that a car has a salvage title, you can only deduce two things: that you are legally forbidden to drive it on the road and that the insurance company did not think it was worth their money to have it repaired. But it might be worth it for you, either to get a car for your personal use or to resell.
Some salvage cars are completely trashed and the insurance companies are selling them simply to recover as much money from them as they can. Some have hidden issues, but some can become a good spare-time project.
You can buy a salvage car at auction for a very low price. Especially if the damage is not substantial, this can really be worth it. You can then have the vehicle repaired, re-registered and you get a perfectly good vehicle for a fraction of the cost.
If you know your way around cars and enjoy repairing vehicles, you can find yourself a nice project. If you don’t know how to repair a car, it might still be worth paying a mechanic to do it for you. This will depend on your budget and how much money, time and effort you’re willing to spend.
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However, you will need to comply with all the rules and regulations in your state. These vary widely. In some states, for example, only a registered mechanic can repair a salvage car. Most states require the process to be documented with photos, receipts for spare parts, etc. So it’s important that you check the rules that apply in your home state before starting this process.
Registration and Insurance
Once the car is back to working order, you will need to re-register it. The requirements for this will also vary from state to state. For example, some states require an inspection while others don’t. In any case, you need to consult your authorities to find out what documentation you need to file in order to re-title your vehicle.
You need to remember that a car with a salvage title can never get a clean title again. But it can get a rebuilt salvage title or equivalent, which means that you can drive it on the road legally. However, the fact that it was once a salvage car cannot be erased from its history, which is likely to reduce its resale value. And if you decide to sell the car at some point, do not conceal the fact that the car is a rebuilt salvage because that would be against the law. Also keep in mind that many dealers won’t accept a rebuilt salvage title as a trade-in.
You will need to get insurance for your vehicle too. This can be a bit problematic. Many insurance companies are reluctant to give coverage to a rebuilt salvage car. But if you do some research, you will find some that do. In some cases, you might need to submit your vehicle to an inspection to reassure the insurance company that the car is in good condition.
So, Is it Bad to Buy a Car with a Salvage Title?
At the end of this process, if you did everything by the book and according to budget, you will find that you spent a lot less than you would if you had bought the same car from a dealer. So, if you would like to save some cash and aren’t afraid of a challenge, buying a salvage car can be a very good option for you.