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 minibusses were exported to Africa and other low-income countries – a fair portion of those vehicles ended 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. Some of those get damaged beyond repair – technically, beyond their 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, 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?
Let’s dig into the pith of salvage titles cars without further ado.
What Is a Salvage Title?
Regardless of the circumstances that led to significant damage to your car – a natural disaster, an accident, or anything else – your insurance company may deem it a total loss. That would mean your car was damaged beyond repair and can be assigned a salvage title. Also, in some states, for example, Florida, it can be given to identify stolen cars.
As a car owner, you must possess a car title and a legal document proving that you own this 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.
How Much Damage Is Enough To Assign a Salvage Title to a Car?
That 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 to salvage title cars. In Michigan, for example, salvage titles are issued for vehicles having lost 75% to 90% of the pre-damage value. However, 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.
How To Get a Salvage Title
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. Still, it’s often reduced to filling out an application, paying fees, and the car undergoing a salvage vehicle examination to assess the damage to the car and the overall condition of the latter.
Source: Protect My Car
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 shape specified on the application, and verify that the parts of your car are not removed, tampered with, or damaged more than has been reported.
How Long Does It Take To Get It?
Getting a salvage title may take up to $50 and 3 weeks, which is how long it may take for your state’s authority to check your application and send you the title.
Can Such Cars Be Insured?
Unfortunately, getting insurance coverage for a salvage title car is not 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, you have to turn your salvage title into a rebuilt one.
Salvage Title vs. Rebuilt Title: What’s the Difference?
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, making it much more attractive on the second-hand car market.
After you’ve got a rebuilt title, you can quickly 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 actual 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 purchased a car, then it shouldn’t exceed the amount of money you’ve saved by buying this type of car). On top of that, find an insurance company that can offer you the most competitive quote.
How To Get a Salvage Title Cleared
Even though salvage title cars can never go back to how 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 actual 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:
- Buy a salvage title car. It might be the biggest challenge since not all states allow individuals to purchase salvage title cars. In some states, only licensed rebuilders are authorized to buy such vehicles.
- Repair the car. While repairing, make sure to take enough pictures of the car – especially the part being damaged and rebuilt – so that all interested parties can access all the nuances of the vehicle.
- Get the car inspected by the Department of Motor Vehicles. The paperwork required to submit your vehicle for inspection will likely include your bill of sale and photos (make sure you have enough).
- Apply for a rebuilt title. Finally, with a little more paperwork being done, you can get a rebuilt title for your car.
Value-wise, a rebuilt title usually reduces the value by up to 40%; a salvage – up to 75%.
Is It Worth Buying a Car With a Salvage Title?
Without a shadow of a doubt, a salvage title car can be a bargain, saving 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:
- Difficulties with getting a car loan: Most lenders avoid financing damaged vehicles, which is why the loans usually bear a higher interest rate and a floating down payment.
- Difficulties with insurance: Insurance companies only work with rebuilt title cars.
- Inability to sell a salvage title car: A salvage title car may not be that easy to sell, depending on the damage type.
However, a salvage title car can still be your savior if you know what you’re getting into. If you don’t, buying a rebuilt title car might be reasonable only if you can avoid the guesswork associated with salvage cars and get an already repaired vehicle ready for use.
Oleksandr is an expert in deep research. He covers insurance topics across four major insurance verticals – auto, health, life, and home insurance – while taking into account the legal landscape of the state in question. Come rain or shine, you can expect regular quality blogs and timely updates from Oleksandr.