Buying a salvage cars at a car auction can be a great option. However, there are some risks involved, especially if you are new to this. You can’t merely buy a salvage car, do some repairs and drive it on the road. Once a car is declared salvage, it can no longer legally drive on the road. It has to be repaired and rebuilt according to specifications defined by law. Also, you will need to apply to the proper authorities the new title.
If you want to buy a salvage car and rebuild it, look into the legal requirements. This is the same if you’re going to drive it yourself or to resell it. These vary from state to state, with some states being more demanding than others. So, the first thing you need to learn is the specific rules concerning salvage cars in your state.
What are the Rules for Salvage Cars in My State?
We have helpfully put together the rules regarding re-titling, and insuring salvage cars in all 50 states here. Check out these guides to know what the case is in your state.
The issue is that each state has different rules on re-titling cars. This means that depending on the damage, some states will be easier to work with than others to re-title.
The best thing you can do is to check the regulations in your state. If you have ties to other states as well, it is also worth checking out their rules. You should be able to decide based on this as to which is most suitable to your car. You should do this research before purchasing a car to avoid additional shipping.
Salvage Title Designations
Whether a car gets a salvage title will depend on state laws. For example, some states will designate a car as salvage based on the extent of the damage it has sustained. For instance, in Louisiana damage to a car must equal or exceed 75 percent of the car’s retail value.
Other states, such as Florida, tie the salvage cars designation to whether an insurance company declares it a total loss. The percentage of the value of the damage required by these states for a total loss classification varies. This range can be from 50 percent to 95 percent of the car’s value.
Also, there are several types of total-loss declarations. Some states use a “junk,” “scrap” or “dismantled” designation that prevents the most heavily damaged cars from being rebuilt. Some states provide a more detailed designation, where the title indicates whether the car is “rebuildable” or “not rebuildable.” Other states “brand” or “notate” the title if the estimate of damages exceeds a certain percentage of the value. Other states have no specific guidelines for issuing salvage titles.
But there are other reasons for the designation of salvage titles. Some states issue flood or hail specific salvage titles. Another possible reason for a car to be designated as salvage is theft. E.g., eleven states issue salvage titles to stolen vehicles: Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma, and Oregon. In many cases, a vehicle is stolen, declared a total loss and then later recovered. These vehicles can be a low-risk purchase at auction, since they may have little or no damage.
Rebuilt Title Designations
After you purchase salvage cars at auction and take care of the repairs, you still need to get them re-titled. Usually, this means getting a rebuilt title from your state. The requirements for this also vary from state to state. In general, however, most states have regulations in place to guarantee that a repaired salvage car meets certain safety standards. You will have to meet these before being allowed back on the road. Usually, states issue a rebuilt title only after the car passes a safety inspection. Some states, however, are even stricter, requiring you to keep hold of all receipts for parts used for repairs. This proof is to prevent the use of stolen car parts.
In all 50 states, sellers are required to disclose whether a car sustained severe damage. For reasons related to fairness and consumer safety, states make the full disclosure of all past damage mandatory. Therefore, if you are selling a previously salvaged car, you are legally required to inform the buyer of this fact. Failing to do so can be severe for you as a seller, as you would be breaking the law.
Once the state issues a salvage title, there is no legal way to erase that from the vehicle’s history. You can very well buy it, repair it and re-title as rebuilt. The car can be in perfect working condition and be perfectly safe to drive. However, you always need to disclose that the car’s history as declared a total loss. This title will impact its market value.
Making a Decision
The main takeaway here is that before you buy auction salvage cars, you need to consider local laws. Not just for sale, but for repairing, registering and reselling it. If possible, choosing to buy, register or sell in a state with laws favorable to salvage cars can reduce some costs.
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- Traps of Salvaged Vehicle and Rebuilt Title Car Insurance
- 10 Steps to Getting a Car Registration in Delaware: How to Get a Salvage Title and Buy Insurance for Vehicle
Also, knowing the legal issues can help guide your purchasing decisions. For example, a car may be too severely damaged to be legally repaired and re-titled in a specific state. However, but it may be worth it in another state with more relaxed legal requirements. Knowing this will allow you to decide whether it is worth investing in specific salvage cars or not.
A Warning: Beware Title Washing States
A salvage title is, purposely, not easy to repair. Having a rebuilt title infers salvage cars have had a lot of repairs. This work should rectify all problems identified by insurers, mechanics, and inspectors. A rebuilt salvage title remains on the documentation, associated with the VIN. Some sellers attempt to re-register a car in another state, usually one with less stringent background checks. They do this as a way to ‘title wash’ or erase this history, to inflate the value of salvage cars. This process is highly illegal and could lead to jail time for the seller.
In some states, it’s possible to repair damage to a car and register it as a refurbished title. In this case, a buyer will still be able to see that the car’s old salvage title. But the restored title denotes the car as repaired.
Some states, because they have relaxed rules on car registration have become more likely to source title-washed cars than others. These states include New Jersey, North Carolina, Massachusetts, California, Georgia, Texas, Virginia, Washington, Tennessee, and Illinois. As a result, these states see more of this illegal practice; you should take extra care buying from these states.
What Can You Do?
If you are buying salvage cars, do everything you can to get a full history report. A history report can be obtained using the Vehicle Identification Number or VIN. You should find the VIN stamped into the body of the car and even on the windows in some cases. All paperwork available to you when deciding to buy the car should also show it. An alarm should go off in your head if the numbers don’t match – or are not provided.
CarFax.com has produced an infographic to demonstrate the scale involved and the top title washing states: