Should I Buy a Car With a Salvage Title?
- What is a salvage title?
- Potential advantages
- Should I buy a salvage title?
- How to buy a car with a salvage title
- Insurance cost
Buying a car with a salvage title is generally not a good idea. Sure, the low prices can be appealing, but unless you’re ready to assume some serious risk, it probably won’t be worth it in the long run.
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What is a salvage title?
A salvage title is a designation given to a vehicle that an insurance company has deemed a total loss.
When an insurance company decides that a car is totaled, they assume ownership of the vehicle and issue it a salvage title.
They might sell it to a repair shop that could put it back on the market. But even after being rebuilt, the car won’t have a clean title. That alone will lower the market value by 20–40% — and that doesn’t include any remaining damage.
States set their own guidelines for what is considered a total loss. Typically, it’s when damage exceeds 55% of the pre-damage value of the vehicle.
Risks of buying a car with a salvage title
Don’t take the decision to buy a car with a salvage title lightly. While the low price tag might be appealing, the risks and drawbacks are plentiful—and often serious.
Safety issues: Not all salvage car rebuilders can be trusted, and they might cut corners to make a quick buck. Some companies will even go so far as to install faulty safety features, like seat belts or airbags. Defective parts can leave a car mechanically unsound and unsafe to drive.
Potential for fraud: Unless you’re a certified mechanic, you won’t be able to verify the condition of the car that you’re buying. Since buyers are often forced to take the claims of repairs made at face value, there is ample potential for fraud. As long as the seller discloses the salvage title, you have no legal recourse if you end up with a lemon.
Limited resale value: The salvage title will stay on the car even after it is repaired, making it incredibly difficult to resell. Dealerships are likely to reject the vehicle as a trade-in, and most private buyers will balk at a salvage title sale.
The car will be difficult to finance and insure: You’ll probably struggle to find affordable financing to purchase a salvage title car. And while you’ll likely be able to find insurance, your coverage options will be limited.
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Risks aside, there are some potential upsides to buying a car with a salvage title. Be forewarned that you won’t get to take advantage of them if you end up with a lemon.
Save on the cost of a car: The fact that salvage title cars are priced at 20–40% below market value can work in your favor if you want to score a deal. This is especially true if you don’t plan to sell or trade the car later down the line.
Find a hidden gem: There are no guarantees on this, but you could find a decent car with only slight damage. A vehicle may be deemed a loss for many reasons. For example, a car can be totaled by hail damage even if it is entirely cosmetic. That said, the bulk of cars with salvage titles are in poor condition, so you might have to do some digging.
They can be used for parts: One of the more practical reasons to purchase a car with a salvage title is to use it for parts. If you enjoy fixing cars, purchasing a salvage title car can save you money on your repair projects for other vehicles.
Should I buy a salvage title?
Probably not. But if you fall into any of the following categories, you could consider buying a car with a salvage title.
You have enough mechanical expertise to inspect and repair the vehicle You know and trust the seller You have no intention to sell or trade the car in the future You need a backup car that will only be used occasionally or for short drives You can’t get a car loan and only have a limited amount of cash to buy a car
How to buy a car with a salvage title
If you’re comfortable assuming the risks of buying a car with a salvage title, here are the safest ways to go about it.
Get an inspection
Unless you are capable of performing the inspection yourself, find a qualified mechanic to provide a thorough inspection before you buy. Don’t rely on the description of repairs given by the current owner. If you agree to buy, you will have no recourse if the claims aren’t accurate.
Research vehicle history
You can get a vehicle history report to learn more about the extent of the damage. It will also be helpful to learn how long ago the salvage title was issued. If the car has been driven for many years since the original damage, it’s more likely to prove reliable.
Consider an unsecured loan
It’s unlikely that you’ll find financing for a car with a salvage title. If you don’t have the cash to pay upfront, consider applying for an unsecured personal loan instead of a traditional car loan.
You’ll need to have insurance before you can drive the car. Unfortunately, finding affordable insurance for a vehicle with a salvage title can be a daunting task.
Using a free service like Jerry will help make that job a whole lot easier.
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How much does insurance cost for a salvage title?
Finding insurance for a car with a salvage title can be tough—let alone finding affordable coverage options.
Many insurance companies won’t insure cars with a salvage title because it is impossible to assess the extent of the damage. Others may offer limited coverage options.
Since the vehicle is more likely to break down or cause problems, you can expect to pay higher premiums to insure a car with salvage title—even for basic coverage.
It’s unlikely that you’ll be able to purchase comprehensive insurance or collision insurance on a car with a salvage title.
Insurance shopping is rarely fun, and shopping around for a reasonable policy on a car with a salvage title can be a real pain. That’s where Jerry comes in.
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