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What is a salvage title car?


salvaged car for sale

What does a salvage title mean in terms of a car's safety, condition and insurability?

A car may be issued a salvage title if it has damage that costs more to repair than its fair market value. Salvage titles are commonly issued when an insurance company declares a policyholder’s vehicle to be a total loss.

When a car has been in an accident, stolen or weather-damaged and repairs will cost more than the vehicle is worth, the car insurance company will total it and take possession. Insurers then sell these cars at auction to salvage yards or rebuilders. The car will be issued a salvage title to warn future buyers that an insurance company has declared the car a total loss.

Most states have laws that set a threshold on the amount of damage needed to declare a car totaled, usually between 51 percent and 80 percent of the car's actual cash value.

There are occasions, however, when a perfectly good car gets a salvaged title. A severe hailstorm can do thousands of dollars of cosmetic damage, leaving the mechanicals as good as new. A fender-bender can cost more to repair than an old car is worth.

While a salvage title brand is not necessarily a reason for refusing to purchase a used car, it's paramount that you research the history of the car before making a decision on whether to buy it or not.

There is no standard definition for what qualifies a vehicle for a salvage title. That means in some cases, when a car moves from one state to another, that the car's history is erased. That's why it's important to get a vehicle history report from CarFax or a similar company to research whether the car has ever been issued a salvage title.

Now that you have the basics on what a title salvage means, let's explore details of other issues that come with salvaged vehicles, namely how to get salvage title insurance, how resale value and financing are affected and how salvage titles differ from other branded titles.

Salvage title insurance: Limited and scarce, but available

If you are hoping to fully insure a salvage-titled car, you may be in for a surprise. You may not be able to buy all types of car insurance. Few auto insurance companies are willing to write collision and comprehensive coverage on a salvage-title car. On the other hand, buying liability only will make for cheap car insurance.

"Insuring a salvage-title vehicle can be a real challenge. Most insurers are reluctant to write comprehensive and collision policies because it is so difficult to put a value on these vehicles," says Kyle Mediger, an independent agent and owner of The Insurance Advisors, based in the Denver, Colorado area.

And, not all insurance companies provide coverage for salvage title vehicles. 

If you buy back a car from an insurer that has totaled it, you may have more luck getting them to issue you a policy, says Penny Gusner, consumer analyst for CarInsurance.com. The insurer knows exactly why the car was declared a total loss and will typically have photographs and other details of the damage.

Forget financing on salvage title cars

Financing a salvage-title car also is difficult. Without comprehensive and collision insurance to protect the car, it's unlikely you'll be able to find a lender, so be prepared to pay cash for salvaged vehicles.

A salvaged car can be rebuilt, but will always be hard to sell

Once a salvage title car is repaired, it would need an inspection and DMV approval to be legally driven again. Typically, after that, the salvage title will be "rebranded" as a rebuilt title. While the vehicle's title designation goes from salvaged to rebuilt, its obvious that it was rescued from a salvage title. This is a red flag for anyone you may want to sell the car to.

There is also little resale value. While the estimates vary, a salvage-title car is worth considerably less than a car that was never in an accident.

These cars are so difficult to value that Kelley Blue Book doesn't provide pricing on them. "There are too many variables and unknowns," says a KBB spokesperson. "From what we hear in the marketplace, wholesalers are paying 30 percent (to) 50 percent of the KBB book value."

An honest seller will never get the current market price for a vehicle that has a salvage title attached to it. People willing to take a risk on a salvage title will demand a huge discount.

Branded titles: What you need to know

There is often confusion around the term "branded title," as some people aren't sure if it's the same as a salvage or rebuilt title. Simply put, the different types of titles are all subcategories of "branded titles." A car's type of branded title indicates what type of damage it has. According to CarFax, here are common types of branded titles:

  • Salvage title -- As we explained above, this designation if for vehicles that have damage that costs more than the fair marker value of the car.
  • Odometer rollback --If it's determined that a car's odometer has been tampered with and rolled back, it will be given an odometer rollback title brand.
  • Water damaged -- Cars that have damage due to flooding may be titled as water damaged.
  • Rebuilt -- A salvaged title car that has been repaired to roadworthy conditions.
  • Lemon law title -- Some states have "Lemon laws," that dictate the parameters for returning a new car that is defective. These laws vary among states. But if a car is returned under the criteria of a state's lemon law, and then is resold, its title will be branded as a "lemon title."

Fraud is common, safety is an issue

You may be driving a salvage-title car already and not know it. Title washing can make it difficult to determine if your car has been in an accident and rebuilt.

State titling requirements vary, which means that a car that has a salvage title in one state can be driven to a state where an inspection is not required and a clean title will be issued. A car with a clean title is worth thousands more, which makes driving a car to another state well worth the trip for shady rebuilders.

Safety is also a concern with any salvage title, or even rebuilt title, vehicle. In some cases damage, such as bent frames or electrical problems, are hard to detect, so be sure you have a trusted and experienced mechanic thoroughly check out any salvage vehicle you may buy or drive.

General tips if you decide to buy a salvage title car

We would recommend that you avoid salvage title cars, but if you decide one is right for you, here are tips to follow:

  • Have a trusted professional mechanic check out any vehicle you are considering. The better the deal you're getting, the more you should insist on an inspection.
  • Get a vehicle history report. Carfax and Autocheck are the top two providers. The money will be well spent if you discover a salvage title.
  • Check with your local DMV in regards to their salvage title laws. Each state has different guidelines for salvage titles. Understand the local policies before you buy.
  • Check the National Motor Vehicle Title Information System. This federal database was supposed to cut down on title fraud. While it has helped, it is incomplete, as not all states participate. Search the database for the VIN of any car you are interested in.
  • Check with your insurance company in regard to coverage and car insurance rates before you buy.

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21 Responses to "What is a salvage title car?"
  1. Betty Vargo

    My best friend bought a salvaged title Ford Focus and it was a total nightmare! Been back at the seller's place most of the time to get fixed. She didn't understand the meaning as to salvaged title but she sure does now. Do not buy them! As of now she doesn't even want it as more recalls await on it and they aren't covered by warranty ...what a mess.

      Reply»  
  2. erick

    I just bought a salvage title vehicle yesterday. I agree that some cars are garbage and others are a diamond in the rough. Do your due diligence. You can save tons of money buying a salvage vehicle. Put as much research into it as if you would be buying a clean title vehicle. This is my second salvage title vehicle I have bought. The first one was great a steal in my book. The truck still had the new car smell. Drove it up and down the coast in California. I actually had to sell it for financial reasons and got $500 less than what I bought it for because it was in that great of shape. No issues whatsoever. I do have to say that if you are planning on buying salvage title buy it because you have a purpose for it or you plan on keeping it for the life of it. Because if you buy it with the intention of selling it in a couple of years you will lose money. That's how I go about choosing my vehicles. Purpose and longevity use. You buy a beater for beater purposes, whether it be a commuter or a work truck. I needed a small SUV in my case so I found a 2011 Toyota Rav4 with 21,000 miles on it. That's my 5 cents. Good luck everyone.

      Reply»  
  3. Stan

    Always get an inspection. I will only purchase salvage title but I do so with an inspection and proof of damage. I tried the auction experience but found that I was risking all of my money and not knowing the extent of the damage. CarFax now values all vehicles based on the history. Check it out for history based values.

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  4. Gandolph

    Don't buy a salvage vehicle. I have one and it was a big mistake. Handling problems have been fixed, but tires still wear unevenly even after alignment. Car has no air bags, they were not replaced. Many other problems too numerous to list.

      Reply»  
  5. Tom

    A huge problem with salvage title is the manufacturer warranty is voided.

      Reply»  
  6. MONIKA

    My car was totaled because of hail damage. It runs great, so what kind of insurance can I get?

      Reply»  
  7. Bob Laberia

    I have been thinking on buying a car with salvage title. You have several great tips in your article, some of which I didn't know or think of. One thing that I learned from another very helpful article is that salvage cars aren't covered by dealer warranty.

      Reply»  
  8. David Norton

    "Clean titled cars" are going through Detroit car auctions. Lease companies and car rental companies are opting not to have their wrecked cars fixed. That keeps their insurance costs down, and allows them to be sold at auction with clean titles - no matter how badly their are damaged. I found out about this from a mechanic acquaintance who actually got burned himself when he bought one of these cars. Looked good outside, but the floor and suspension were still bad because nothing had been done to fix them. There should be special legislation passed to stop this practice. When people are being duped, the car insurance companies are being duped also!

      Reply»  
  9. Daniel

    Salvage cars are the best, I drive salvage only. There are clean title cars way worse then a salvage car. Do yourself a favor and visit any auto body shop and see how many cars are there to have the auto body work done and to find out that most of those cars if not all of them are clean title and not salvage. Most of auto body shops are full of clean title cars that get fixed everyday and nobody complains about it. Dealers are making salvage cars have a bad name because they can't keep up with the good work that is done by the good guys that fix and repair salvage vehicle. Also most insurance companies will insure any salvage car. Just until recently most people did not even want to insure their car until the law came in effect and most people just want to have liability and insurance companies insure a salvage car very easily especially if its only for liability coverage.

      Reply»  
  10. tommy dee

    Don't worry if it's not safe, the officials won't allow it to be placed back on the market. But someone is always looking to save a couple bucks and will buy the car. There is always an insurance company that place coverage on it and repair it. I have owned salvaged vehicles for the past 20 years, saving a lot of money, relax, just don't drive like a maniac and you'll be fine.

      Reply»  
  11. Jorge

    Is there a standard like KBB, or the NADA books for vehicles that will list salvaged cars in order to have an idea how much can we offer in comparison to a car with clean title?

      Reply»  
  12. Rebel

    If I am willing to buy salvage title vehicle and insurance refuses coverage, I turn the vehicle to drag racing car or off road toy truck like trail or mud truck and then sell it. Someone might interesting for sporting or recreation use, right?

      Reply»  
  13. Fred

    One of the most important things when buying a salvage title is realizing it was probably sold at an auto auction. You can find free damage history just by searching online. Then you should check the Carfax. This process has helped me a lot instead of just buying a Carfax and being dependent on just that.

      Reply»  
  14. Alex

    I would buy a salvage car. I bought two already with light damage. Passed inspection, repaired and got rebuilt title. It really saved me some money.

      Reply»  
  15. Bob Jewell

    I am looking to buy a salvage/rebuilt title Ford and I checked with State Farm and they had no problem giving me full coverage problem once they inspect the car.

      Reply»  
  16. Alex

    I would buy a salvage cars. If you purchase from auction you can order inspections. I bought 2008 Camry with light damage, 89,000 miles for $3,800 including delivery and broker's fee. I think it was a good deal and was able to find insurance without a problem.

      Reply»  
  17. Hayden Lewis

    Progressive will cover a flood-titled car but not Geico, as I have found out. Sad as my little car is, it actually still goes really well.

      Reply»  
  18. Matthew Williams

    I used to think that salvage yards were just dirty compounds with tons of old cars & parts. After my first visit to a U-Pull-It three years ago, my view totally changed.

      Reply»  
    1. Doniemonie December 29, 2018 at 6:25 AM

      Salvage vehicles can be gold mines as in a great, cheap car to own -- if you don't mind getting dirty by fixing it up.

        Reply »  
  19. Mike

    Insurance companies recover thousands of dollars off selling their insurance total loss wrecked vehicles. Cars are made of parts built by humans and rebuilt wrecks are just the same. They are just as good as the rebuilder. To paint all of them with the same brush is just unfair. A properly rebuilt car may not be for everybody, but if you plan to use it up, they can save a consumer thousands of dollars, especially with today's used car market which is through the roof. A competent mechanic can easily inspect a rebuilt wreck and determine if any major problems are present. If you insurance companies did not have ready buyers for your salvage at high prices, none of us could afford insurance.

      Reply»  
  20. Alex

    Let's see how the car gets a salvage title. After the accident, the repair shop call estimator from the insurance company. Estimator evaluates damage and check car with black book value. If repair cost less then 50% of book value it will be repaired otherwise the insurance company will pay the money to the bank or to the owner and will issue the salvage title. This car will be sold on salvage auction. The buyer of the salvage car must to repair it and pass inspection in motor vehicle inspection center. During the inspection owner of auto must provide picture with damage and damage list from insurance company as well as all receipt for new parts and bill from repair shop. Only after the new title will be obtained cars can register. A lot of clean title cars on the road had damaged and repaired but insurance company even do not know about it. If you buy any used car you have to check it with your mechanic. This is the only way to be sure that auto in good mechanical condition.

      Reply»  
Disclaimer: Answers and comments provided are for information purposes. They are not intended to substitute informed professional advice. These responses should not be interpreted as a recommendation to buy or sell any insurance product, or to provide financial or legal advice. Please refer to your insurance policy for specific coverage and exclusion information. Please read our Terms of Service.

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