Rick's Free Auto Repair Advice

Salvage Title

What is a Salvage Title?

A vehicle that has a salvage title is one that has been stolen and recovered, involved in an accident or natural disaster where the cost to repair the vehicle is most likely more than the vehicle is worth. The limit varies by state and insurance regulations in each state. But generally, if the cost to repair exceeds 70%-80% of the vehicle’s fair market value, the insurance company will pay the owner the market value of the vehicle and sell the damaged vehicle at a car auction.

Who buys the salvage title vehicle?

Junkyards and dealers bid for the salvaged vehicle at an auto auction. Junkyards purchase the damaged vehicle to disassemble for parts. Dealers, on the other hand, purchase the vehicle for parts or to restore and resell with either a salvage title or a restored title.

What is a restored title?

Some states allow persons to purchase a salvage title vehicle and repair it. Once repaired, the seller must provide receipts for the parts used in the repair of the vehicle and have the vehicle inspected by the state or road-worthiness and safety.

States vary in how detailed the inspection must be before issuing a restored title. New York and New Jersey, for example, have relatively lax standards for restoring a salvage title. So dealers in those states often purchase flood or fire damaged vehicles at auction, perform minimum inspection and few repairs, get a restored title, and then sell them. This is referred to as title washing. For more information on title washing, see this post

Should you buy a vehicle with a restored title?

Here are the  downsides to buying a salvage title vehicle:

• They’re hard to finance. Since they’re not worth full market value and they have a less desirable title, most finance companies will only lend a fraction of the selling price. In most cases, that’s less than 50% of the vehicle’s value.

• They have extremely low trade in value. No dealer wants to take a salvage vehicle in trade because they’re so hard to resell. So you’ll get pennies on the dollar if you ever try to trade it in.

• They’re hard to insure. Most insurance companies won’t even allow you to purchase collision coverage on a salvage vehicle. Their reasoning is simple; the body has been damaged significantly, so any further repairs will cost far more than normal.

• They’re often unreliable. You don’t know the expertise of the person who rebuilt the vehicle. They may be good at body work, but fail misearable at suspension, engine and electrical rebuilding.

How to spot a salvage vehicle with a rebuilt title

• Track the ownership trail using CarFax or AutoCheck. If the vehicle was moved from one state to another state with lax rebuilt title laws, chances are it’ll be a problem vehicle.

• Check the wheel well area and all the paint for signs of chipping or paint mismatch. Shady rebuilders simply spray over non-damaged areas without proper surface preparation.

• Check door, hood and truck fit. Open and close the doors and notice how they close and latch. If there’s misalignment, chances are it’s been in a major accident.

• Operate ALL electrical accessories. Check power windows, mirrors, seats, cruise control, lights, heater, defogger, etc. They must all work.

©, 2021 Rick Miuscoplat


Posted on by Rick Muscoplat

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