When you buy a car, you generally look for a clean and clear title. However, there may be an instance where you encounter something a little out of the norm. If you’ve found a listing for a vehicle with a salvage title in a sales paper or want ad section, or through a car auction, it pays to know exactly what that means. There’s a very real chance that you could get an excellent deal.
What’s It All About?
Cars, trucks, minivans and other vehicles are damaged all the time. It might be an accident. It might be a natural disaster (fire, flood or something similar). It could be anything. However, if the amount of damage sustained by the vehicle is greater than its value (deemed a total loss), the insurance company will write it off. The state where the vehicle is registered will then issue a salvage title.
Of course, the words “total loss” mean something different to an insurer than they do to most buyers. A vehicle’s damage might only add up to about 75% of its total value and an insurance company will still declare it a loss. It’s really more about what it’s worth to the insurer to have the car fixed, rather than the actual inherent value of the vehicle in question.
Another consideration here is that depending on the situation, a salvage title might put limitations on what a particular vehicle can be used for after a purchase. For example, the car might need to have an inspection before it is allowed back on the road legally. Others might be designated as “for parts only”. Some states have their own peculiar requirements here as well (only rebuilders with state-issued licenses are able to purchase the car, for instance).
One potential issue is that you cannot insure a car with a salvage title. The remedy here is to have the vehicle repaired, and then inspected by the state (in most areas this is required). Once that occurs, you’ll be issued a rebuilt title instead of a salvage title, and you’ll be able to insure the car. As a note, you should contact your insurance company first to find out if they’ll cover the car. Some won’t, and some will only offer liability coverage, rather than full coverage.
Vehicles with salvage titles can actually represent smart buying decisions in many instances, so long as you know what you’re getting into. For instance, if you’re working with a limited budget and need a cheap deal, if you’re not particularly worried about a brand new vehicle, or if you’re looking for a vehicle that might need some fixing up, these can be great choices.
Understanding Salvage Title Types
Complicating this situation is the fact that there are multiple types of salvage title, and they can vary somewhat from state to state. Before you make a purchase, it’s important to understand each type and what each particular designation actually means.
Junk/Scrap/Non-repairable: This type of title means that the vehicle has been designated for junk, scrap or parts use only. It cannot be titled for road use in any instance. These are good for getting parts for rebuilding other vehicles, as many of the components can be reused.
Theft/Recovered: When a car is reported stolen, some insurance companies will replace the vehicle for the owner (depending on the company and the owner’s policy). When this happens, the stolen vehicle is written off. There may be nothing wrong with the vehicle at all, but the salvage title will mean that it’s offered for a very low price. This type of vehicle can be an exceptionally good purchase. Note that only 11 of the 50 states actually issue a stolen vehicle salvage title.
Flood: Vehicles damaged in floods are required by law to be titled as such (with a salvage title), but that doesn’t mean they’re not worth your time. You’ll need to judge on a case-by-case basis, but many “flood cars” can be excellent investments and are mechanically sound. Note that not all states require the title to reflect the fact that the car was involved in flooding, and only mandate that it have a salvage title.
Hail Damage: Hail damage can be extensive, but it can generally be easily repaired with a few new body panels and possibly some new glass. This means that you can purchase a hail-damaged car with a salvage title for very little, invest a bit of cash, and have an almost new car when you’re done. As with flood damage, hail damage is not always noted on the salvage title (it depends on the state in question), but it should be obvious from a visual inspection unless the car has been repaired.
Vandalism: Vandalism is probably the least common type of salvage title you’ll encounter, and it can mean many different things. A car that’s been heavily graffitied and damaged may be written off as a total loss. A car that has been overturned as an act of vandalism may also be written off by the insurance company. In many instances, these are perfectly good vehicles that the insurance company simply didn’t feel like repairing.
Collision/Accident Damage: Perhaps the most common type of salvage title out there involves collision damage. These vehicles have been involved in accidents and have sustained enough damage that it’s cheaper for the insurance company to write them off rather than repair them. They can be used for parts, but in many instances, a little money invested in repairing the vehicle can be well worth it.
Restored: A considerable number of restored classic and antique cars actually have salvage titles. This is due to a number of different reasons, but one of the most common is that the original title has been lost, and the state requires that a salvage title be issued (due to the restoration being completed with a significant number of aftermarket or non-OEM parts).
Is a Salvage Car Title Worth Your Time?
A car with a salvage title can often be a very wise investment. While there are certainly vehicles that should be avoided, a savvy buyer can make a smart decision and spend a few thousand dollars to purchase a car that will ultimately be worth far more than that. Perhaps the best advice here is to shop smart, to fully inspect any salvage car you’re considering, and then make an informed buying decision.