What Is a Salvage-Title Vehicle?


What Is a Salvage-Title Vehicle?
Buying a vehicle with a salvage title can be a bit of a gamble, but such cars can be an inexpensive alternative for shoppers on a budget.
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Buying a vehicle with a salvage title can be a bit of a gamble, but such cars can be an inexpensive alternative for shoppers on a budget.
Comments
Doug Albee
A minor collision that does little damage can create a perfectly good car that will carry a branded title.
On the other hand, I wouldn't touch a late model otherwise nice car with a salvage title.
I know of a guy whose car was totaled when his car was stolen and then recovered with most of the interior and some other parts missing. His insurance company paid him off and then offered the car back to him at the salvage price. He bought it, found the missing seats etc in a wrecking yard and basically brought the car back to it's original condition.
He now has a car with a branded title. When he finally sells it it's value will be affected and there will be those people who wouldn't touch it but he does have before and after photos and a story to tell.
I wouldn't buy one unless it were something older and not worth a lot and only then If I knew the circumstances surrounding the branded title. I would want to see photos etc.
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The rule is: "Whatever gets you into a car cheap, is going to haunt you when you sell it".
A salvage car is a car that has been declared by an insurance agency as a total loss. Most often, these are cars that have suffered damage to a degree in which that the owner’s insurance company decided that it would be too expensive to fix the car because the overall value of the car is close to being met or even exceeded by the costs of the repairs. Insurers will write off, or “total” a car in a situation like this, and will often offer a settlement to the car’s owner in exchange for taking the wrecked car off their hands.
This, however, does not mean that the car has been completely wrecked, as in some cases even relatively minor damage may be considered to be too expensive to fix in a lower value car. In other cases, however, a car can be declared a total loss if it has been stolen and has gone unrecovered for a specific period of time.
Cars in any of these circumstances become property of the insurance company and are reclassified as salvage. This means the car has to be issued a new title that lists its status as a salvage vehicle under state law. Insurers then take these salvage cars that they now own and attempt to sell them off to the highest bidder at a used car auction.
While each state has different regulations, there are several aspects in common. The most important one is that you cannot get a car with a salvage title back on the road without repairing it first. This means that if you do buy a damaged salvage car at auction, you can’t drive it until it’s rebuilt to the point where your state will let it back on the road once more. For most people, this may seem like a bad deal.
However, there are some advantages to buying and then rebuilding a salvage vehicle. First and foremost: buying a salvage car at auction can be incredibly inexpensive, as insurers just want the car out of their possession and are little interested in recovering their costs.
Additionally, if you are going to restore the car yourself or otherwise absorb the labor costs, it will be much less expensive to repair the vehicle than it would have otherwise been. This makes it a solid investment if you want your own reasonably-priced used car as a daily driver or if you own a used car dealership and you’re planning to sell rebuilt salvage vehicles to customers.
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Insurance companies will usually bail on a repair once the cost estimate hits about 60% or so of Fair Market Value. So, a car worth $10,000 on the open market is damaged to an estimate of $6000, it's definitely going to be salvage title. Maybe even $5000 in damages.
One thing to keep in mind: "Whatever gets you into a car cheaply when you buy it, will come back to haunt you when you try to sell it".
So, IMO, buying a salvage car is best left to owners who intend to drive it for a considerable length of time.