How Much Should I Pay for a Salvage Title Car?

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Rachel Bodine graduated from college with a BA in English. She has since worked as a Feature Writer in the insurance industry and gained a deep knowledge of state and countrywide insurance laws and rates. Her research and writing focus on helping readers understand their insurance coverage and how to find savings. Her expert advice on insurance has been featured on sites like PhotoEnforced, All...

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Leslie Kasperowicz holds a BA in Social Sciences from the University of Winnipeg. She spent several years as a Farmers Insurance CSR, gaining a solid understanding of insurance products including home, life, auto, and commercial and working directly with insurance customers to understand their needs. She has since used that knowledge in her more than ten years as a writer, largely in the insurance...

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Reviewed by Leslie Kasperowicz
Farmers CSR for 4 Years

UPDATED: Jul 13, 2021

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What You Should Know

  • A salvage title is given to car when it was damaged so badly that it can’t be driven safely, and it was deemed as a total loss by the insurance company
  • Repairs, evaluation, vehicle history reports, or rebuilt title are some of the costs a branded title car might incur
  • Some insurance companies might provide you with liability insurance for salvage title cars

Salvage cars can be a great deal for those looking to buy a car at a lower price point than new, used, or leased vehicles. What is a salvage title on a car? Salvage cars are typically damaged and considered a loss by most insurance companies, buying a salvage car can be a real handful—especially if you’re planning to fix it up yourself. 

With the costs of repair and maintenance in mind, you might be wondering: How much should I pay for a salvage title car?

In this short guide, we’ll provide you with the tools you need to assess the value of a salvage car, estimate your insurance coverage, and make a decision about your purchase.

How Does a Car Get a Salvage Title?

Each state will have its own eligibility requirements that determine what a salvage vehicle  is and how each car is evaluated.1 Knowing what constitutes a salvage title can inform you whether or not the purchase is worth the investment.

Generally, a car with a salvage title is one that is:

  • Damaged or wrecked badly enough that it can’t be driven safely by legal standards
  • Determined a total loss by an insurance company because the total cost of repairs are deemed too high relative to the car’s value2 

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How Much Should I Pay For a Salvage Title Vehicle?

When purchasing a salvage title car, you’ll need to assess its true value.

While Kelly’s Blue Book, a reference guide to used car prices, can be used as a guideline, salvage cars don’t retain their Blue Book value. Instead, you can consult National Automobile Dealers Association (NADA)’s Edmunds guidelines—an automotive pricing guide that assists car buyers. 

To create your own estimate, insert the car’s details and condition level into Edmunds’s online appraisal tool to find the retail value and trade-in value for the salvage car’s make, model, age, and mileage. 

Identify the most conservative ends of the ranges. Then, add the retail and trade-in values together and dive by two to figure out an estimate for the car’s market value.3

As you know, due to the car’s salvage history, it won’t have its full market value. Insurance companies use a percentage of the car’s market value (anywhere between 40% and 75%) to value salvage cars and multiply that percentage by the market value to appraise the salvage car.

What Costs are Involved with a Salvage Title Car?

Although the upfront sticker price for a salvage car is likely appealingly low, it’s important to consider the long-term costs that a salvage car might incur. The following factors will affect long-term costs and, if addressed, may solve the problem of how to get a salvage title cleared. 

  • Repairs – By definition, a salvage car has undergone significant damage. Even if the internal workings of the car are in good condition, there’s most likely damage in the interior or exterior of the car. In that case, you’ll need to budget for repairs before the car is ready to hit the road. However, be aware that it can be difficult to initially assess how badly damaged a salvage car is, so repair bills may be higher than you initially predicted.
  • Evaluation and vehicle history reports – To ensure your investment is worthwhile, you’ll need to spend some money upfront to hire a trustworthy licensed mechanic to assess the car’s value and evaluate its history. 
  • Rebuilt title – Even after being repaired, the car will still have a salvage title. So, can you drive a car with a salvage title? Any car with a salvage title is illegal to drive. To confirm that your new car is now safe for the road, you’ll need to pay for a state salvage inspection and acquire a rebuilt title.4

Is A Salvage Car Right for You?

Because they’re fixer-uppers, salvage cars are an opportunity to take home a new-to-you car at a great rate. It’s possible that the damage can be easily repaired—you may even find a high-end make and model way below market rate.

However, there are also some serious potential drawbacks when buying a salvage car and potential costs beyond the sticker price. 

What to Know About Owning a Salvage Title Car

The important thing to remember about any salvage title car is that it does have serious damage. Repairing the motor vehicle to good function may be possible and even relatively easy. However,  it may also be extremely difficult and hard on your wallet. Even if the car’s driving again, lasting damage to airbags, brakes, or other systems may render the car unsafe. 

Because of the car’s salvage history, some options available to a new or lightly used car may not be available to your fixer-upper. For example, most dealerships won’t accept a car with a salvage history as a trade-in, and you may be obliged to disclose its history in other sales. If you’re investing in a salvage car, do it for the long run as there’s not much (if any) upsale value. 

How Do I Know a Salvage Car’s History?

It’s important to know the history of your salvage car’s damage to understand whether it’s a worthwhile investment—but how do you find that out?

Depending on the state where your car’s salvage title was issued in, the title itself may disclose the circumstances of the car’s damage, like whether it was in a head-on collision or a flood.

If that isn’t the case, it’s best to obtain a Carfax report or other vehicle history report. The ideal situation is that the seller honestly disclosed the car’s background. However, be wary that the seller may not be forthcoming if the information makes the car less desirable to buy. 

Red Flags that a Salvage Car isn’t Worth Buying

Although some damage to the car can be repaired, leaving the car in a good (and drive-able) condition, some types of damage aren’t advisable to try to fix. 

It’s important to assess whether damage to the vehicle is cosmetic, or if the damage impacts any of the key systems the car requires to function. If the engine of the car is considerably damaged, it may mean the car will never be reliable to drive, and that the repairs to try to make it so would be extremely costly.2

It’s important to also be aware of the origin of the damage. Cars with deep water damage from floods, for instance, may have incurred corrosion to the internal systems of the car that aren’t immediately visible. The car may appear fine for months or even years, but pose a danger to drivers in the future.6

Signs a Salvage Car Might Be a Good Fit

Although investing in a salvage car isn’t for everyone, it can be a great deal and a fulfilling project or business proposition for a buyer with the right experience, skills, and outlook.

Here are some of the indicators that buying and repairing a salvage car might be a good idea for you:

  • You’re a mechanic – If you’re an experienced and capable car repair aficionado who’s confident assessing and repairing a car’s damage, a salvage car may be a fun project for you.
  • You’ve had the car assessed – If you’ve had the car inspected by a mechanic, and they’re confident in the car’s status and prospects for repair, consider a salvage car a good option for you.
  • You’re in it for the long run – Consider investing in a salvage car if you know you aren’t going to trade in or selling a car with a salvage title down the line. You have the financial and logistical flexibility to manage the car’s repairs and long-term damage.
  • You’re trusting of the seller – It may be easier on your mind and wallet if you know the seller personally or have prior knowledge of the car’s background so you can trust that there won’t be any surprises down the line. 
  • You’re not qualified for financing – Sometimes, those who aren’t good candidates for new-car financing can find a great deal when buying a salvage car, especially when paying cash. 

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What Should I Know About Insuring a Salvage Title Car?

While salvage titles cannot be insured, a rebuilt salvage title can. 

Auto insurance is always a priority, but for drivers of a rebuilt car, it’s invaluable. You’ve invested time and money into your new ride, and you want to be able to drive the car legally and be financially protected from anything unexpected that might happen. 

Finding the right auto insurance for you can come with extra steps for drivers of a repaired car. Why? It’s a lot harder for insurance companies to confirm the value of a salvage car and how it might withstand future damages. As such, insurance companies are less likely to provide coverage.6

The good news? Some insurance companies will provide salvage title cars with liability insurance. Liability insurance covers:

  • Any property damage to another party 
  • Any bodily injuries caused to another person

However, since the car already has a damage history, it may be difficult to find a car insurance company that will provide full coverage rather than liability coverage. 

Find the Right Insurance for Your Salvage Title Car with 4AutoInsuranceQuote

Salvage cars are an investment—value assessments, repairs, title registration—and, naturally, you want to keep that investment protected. As such, good auto insurance is key for drivers of a rebuilt title car, but, as you know, a good policy can be difficult to find—that’s why it’s so important to find an insurer that can meet your unique needs. 

Not sure where to start?

While there’s a lot that’s complicated about buying insurance for a rebuilt car, this part is easy—start with 4AutoInsuranceQuote.

We have everything you need to compare insurance quotes and coverage to help you find the most protection at the best rates. 

Invest smartly in a salvage title with 4AutoInsuranceQuote.

References:
  1. DMV. How to Apply for a Salvage Title. https://www.dmv.com/salvage-title
  2. DMV. Buying a Car with a Salvage Title. https://www.dmv.org/buy-sell/used-cars/buying-a-car-with-a-salvage-title.php
  3. Your Mechanic. How to Calculate the Value of a Salvaged Car. https://www.yourmechanic.com/article/how-to-calculate-the-value-of-a-salvaged-car-by-jason-unrau
  4. Value Penguin. How to Insure a Car with a Rebuilt or Salvage Title. https://www.valuepenguin.com/how-get-car-insurance-salvage-title
  5. Consumer Reports. Beware a Flood of Flooded Cars https://www.consumerreports.org/buying-a-car/beware-the-flood-of-flood-cars/
  6. U.S. News. Should I Buy a Car With a Salvage Title? https://cars.usnews.com/cars-trucks/best-cars-blog/2016/12/should-i-buy-a-car-with-a-salvage-title
  7. Your Mechanic. How to Calculate the Value of a Salvaged Car. https://www.yourmechanic.com/article/how-to-calculate-the-value-of-a-salvaged-car-by-jason-unrau

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