Does it Make Sense to Buy a Salvage Car at a Dealer Auction, Fix it Up, and Sell it for a Profit?

Buying and selling salvages cars can be a good source of income for you. You can get amazing deals buying salvage cars for sale at online auctions and from private dealers. These cars, which start at about 5% below market value and go down from there, are often stunningly cheap. The reason is simple: a salvage car is a car that an insurer has deemed a total loss. That means it’s not worth the insurer’s while to fix up it up after damage by flood, car accident, or storm.

Often, the damage is merely superficial. But sometimes the damage is structural, undermining the frame of the car or the engine’s integrity. This makes it impossible to restore the car. You won’t know where your salvage car falls on this here unless and until you get an accurate vehicle history report.

If you’re lucky enough to get a restorable car, you might be lucky enough to be able to sell it at a profit. Here’s what you need to know about the process.

Find out where to buy a salvage car at auction here.

The Perils of Selling a Salvage Car

With only a limited number of exceptions, a salvage car will always be labeled a salvage car. That’s going to drive down its value no matter how beautiful it is or how much work you put into it.

So when you purchase a salvage vehicle with an eye toward selling it, don’t look to the general market to get a feel for how much you can expect. You must instead adjust your expectations downward based on the going value of most salvage cars.

If you buy a salvage car with the intention of selling, you may run into some difficulties. These may include:

• Making less on the sale than you hope.
• Spending more on the refurbishment than you make on the sale.
• Not being able to sell the car at all (if the car is junk).
• Learning that it is a stolen car, or that the original seller obscured its full history.

Further Reading

• Can I Buy a Flooded Car and Then Fix it to Obtain a Title in Mississippi
• Can I Buy a Flooded Car and Then Fix it to Obtain a Title in Florida?
• Can I Buy a Flooded Car and Then Fix it to Obtain a Title in Arkansas?
• Can I Buy a Flooded Car and Then Fix it to Obtain a Title in Georgia?

The Crime of Title Washing

If you’re struggling to sell a restored salvage car, you might be tempted to find a way to obscure its status as a salvage car. This may be particularly tempting if you’ve put a lot of work into the car and you know it’s safe to drive. That impulse is normal, but it’s not one you should indulge.

Obscuring a car’s status as a salvage car is a crime known as title washing. You can go to jail for it, or face costly lawsuits. One of the most common strategies for title washing is to drive the car to another state and register it there to hide the car’s history. This might feel harmless, but it’s illegal, immoral, and highly risky to both you and the buyer. Just don’t do it.

When Does it Make Sense to Sell a Salvage Car?

So is a salvage car a good investment? Should you take the plunge on that tempting car on an auction site? And how much work should you put into a salvage car? A salvage car may be a good investment if:

• You have access to a car history report that shows the damage is only superficial.
• The car is a high-value vintage car, a car that is no longer available in the market, or an otherwise sought-after car that may sell for a high value even as a salvage title.
• You can afford to fix any damage to the car, and for far less than the amount for which the car will sell.
• You have already identified an interested buyer.
• A mechanic you trust can do a complete and comprehensive inspection of the car.
• Your state allows title rebuilding.

Racing Cars: A Potential Exception?

Selling a salvage car is always somewhat risky. The market can change on a dime, and a once-valuable car may become less valuable thanks to market forces outside of your control.

There’s one potential exception to this phenomenon: cars sold for uses other than on the open road, such as race cars. Cars used at local race tracks don’t necessarily need to be road ready. They need only have engines that help them go fast. Every racetrack has its requirements for car, but some will accept cars with extensive damage. Others require a very sturdy frame, and many fall somewhere in the middle.

Race car drivers know that their cars may be beaten up. Some even enjoy knocking their cars around and endlessly fixing, refixing, and rebuilding them. So if you’re willing to sell a car to race drivers, you may be able to turn a tidy profit, maybe without even fixing up it after a car wreck.

Title Rebuilding

In some states, rebuilding the car’s title may be an option. This is known as title refurbishment and allows you to seek a refurbished title if you repair damage to the car. The car will still have a refurbished title, which hints at its history as a salvage car.

However, a car with a refurbished title is preferable to a salvage car. This is because a car only becomes eligible for title refurbishment after repairs. For more information on title refurbishment in your state, you will need to consult local laws and follow the process for a refurbished title to the letter.

See our Vehicle Auctions and Education Centre.