While the U.S. is known to be the largest exporter of used motor vehicles to developing countries – from 2015 to 2018, over 14 million cars, SUVs, and minibuses were exported to Africa and other low-income countries – a fair portion of those vehicles end up being re-bought by the Americans themselves.
With one of the busiest road traffics in the world, the United States is home to about 280 million vehicles of which nearly 12 million are involved in crashes annually. It goes without saying that some of those get damaged beyond repair – technically, beyond its fair market value – and declared a total loss by an insurance company that paid a claim on it.
Not only does ‘salvage title car’ branding tell potential buyers about the incident and the type of damage that the car has incurred, but it also significantly lowers the price of the vehicle and makes it worthwhile for seekers of undervalued cars. At the end of the day, though, the question is, is it worth buying a salvage title car, or would it be just a waste of money? And how many nuances should one know before taking action?
Without further ado, let’s dig into the pith of salvage titles cars.
Regardless of the circumstances led to significant damage to your car –whether it was a natural disaster, an accident, or anything else – your insurance company may deem it a total loss, which would mean that your car was damaged beyond repair and can be assigned a salvage title. Also, in some states, for example, Florida, it can be assigned to identify stolen cars.
As a car owner, you must possess a car title, which is a legal document proving the fact that you own this particular vehicle. Now, a salvage title would work similarly, with an addition that it would also indicate that your car has been declared a total loss by an insurer.
As being said, it’s within the competence of an insurance company to determine whether a particular car can be deemed totaled. At the same time, a salvage title can only be assigned to a car if its repair cost exceeds 50% to 100% of its market value at the time of the accident.
Some states, though, have peculiar rules as to salvage title cars. In Michigan, for example, salvage titles are issued for cars having lost 75% to 90% of the pre-damage value, though the very fact of the issuance of a salvage title doesn’t necessarily mean that the car is declared in total loss. In Oregon, the threshold is 70%, but a salvage title can also be assigned to an abandoned car worth less than $500.
Depending on the circumstances, either you – if you don’t have car insurance, or if you have decided to keep the total vehicle – or your insurance company – if it will keep the totaled vehicle – can apply for a salvage title.
The exact application process depends on the state, but it’s often reduced to filling out an application, paying fees, and the car undergoing a salvage vehicle examination to assess the damage made to the car and the overall condition of the latter.
Note, however, that a salvage inspection differs from a regular safety inspection you may be accustomed to. A salvage title inspector may verify the VIN of your car, check the odometer, compare the actual state of the vehicle with the state specified on the application, and verify that the parts of your vehicle are not removed, tampered with, or damaged more than has been reported.
Getting a salvage title may take you up to $50 and 3 weeks, which is how much time it may take for your state’s authority to check your application and send you the title.
Unfortunately, it is not possible to get insurance coverage for a salvage title car – nor is it possible to legally drive a salvage title car on public roads – but some companies will offer liability coverage and other types of coverage for salvage title cars that have been restored or rebuilt. For that, though, you have to turn your salvage title into a rebuilt title.
The difference between a salvage title and a rebuilt title is the latter allows the car to be insured and legally driven on public roads and therefore makes it much more attractive on the second-hand car market.
After you’ve got a rebuilt title, you can easily get liability insurance and even some other packages. But then again, getting a full coverage policy may still be a challenge since many insurance companies refuse to provide it due to the difficulty of estimating the real degree of damage made to the car.
Anyway, before buying salve title insurance coverage, make sure the cost of the coverage is reasonable (if you’ve bought it car, then it shouldn’t exceed the amount of money you’ve saved by buying this type of car) and the insurance company offers you the most competitive quote.
Even though salvage title cars can never go back to the way they were titled before, most states will allow you to obtain a rebuilt title. For that, you will have to submit your repaired vehicle for inspection to the Department of Motor Vehicles, and if your car has passed, then voila, the new title is yours.
That said, everyone knows that all rebuilt title cars were once totaled, and the real damage may not always be identified even by the most careful examination – which will likely devalue your salvage car at least to some extent on the market.
In a nutshell, to remove a salvage title on your car and apply for a rebuilt one, you have to:
Value-wise, a rebuilt title usually reduces the value by up to 40%; a salvage – up to 75%.
Without a shadow of a doubt, a salvage title car can be a bargain. It can save up to 75% of the money you would spend on a clean title car. On the flip side, though, you will inevitably have to deal with some disadvantages, such as:
However, a salvage title car can still be your savior if you know what you’re getting into. And if you don’t, then it might be reasonable to buy a rebuilt title car, avoiding the guesswork associated with salvage cars and getting an already repaired vehicle that is ready for use – especially given the fact that rebuilt title cars can be as cheap as their salvage title counterparts.
Oleksandr is an expert in deep research. He covers various insurance topics across verticals, adopting to every local law.