What Is a Salvage Title on a Car?
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UPDATED: Jul 13, 2021
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- For most insurance companies, total loss happens when the damages of the vehicle surpasses its value
- Purchasing a salvage title vehicle will expose you to the risk of losing functionality and reliability
- The salvage title can be removed by refurbishing and repairing the vehicle
You’ve been scouring the market for weeks, trying to find a reliable car that fits your style and your budget. Suddenly, you stumble upon a model with a shockingly low price tag—is it too good to be true?
Possibly. If you take a closer look, you may find an important disclaimer: “salvage title.”
So what is a salvage title and can you drive a car with a salvage title?
What is a salvage title on a car?
In this article, we’ll break down what a salvage title is and whether a car with a salvage title is worth purchasing.
Understanding Salvage Titles
Salvage titles are disclosures about a car’s history that exist to protect consumers. When a car has a salvage title, it means the car’s previous insurer deemed the vehicle to be a total loss after an accident or damage. Ultimately, it was more affordable for the insurance company to pay out and repossess the car than it would have been to repair the damage.
The rules vary from state to state, but a car is generally considered a total loss “when the car’s repairs would cost 50% to 90% of its pre-crash value.”1
Since the car is given a salvage title, you are not allowed to drive it on main roads. So, the next concern would be, can you remove the salvage title? If you can, what’s the best way to navigate how to get salvage title cleared? If you repair and refurbish the car you, may be able to remove the salvage title.
When Are Salvage Titles Used?
A state’s Department of Motor Vehicles may issue a salvage title in the event of:
- An accident
- A natural disaster
- The loss of a vehicle
- The theft of a vehicle
With any of these instances, a salvage title application can be completed by:
- The vehicle owner, if the car is not insured and/or the owner intends to keep the vehicle
- The vehicle insurer, if the insurance company intends to repossess the vehicle
If the application is approved, the Department of Motor Vehicles will issue a salvage title that will go on the car’s record. To recoup some of the financial loss, insurance companies may try to resell the salvaged car.
Does Having a Salvage Title Mean a Car is Totaled?
People often refer to a car being a “total loss” or “totaled vehicle” when there is extensive damage to a car. Insurance companies, however, have their own definition. Total loss occurs when the damage exceeds the value of the car itself. This doesn’t necessarily have to be internal damage—it can mean extensive external, cosmetic damage.
A car that has been deemed a total loss or a totaled vehicle, and earned a salvage title isn’t necessarily irreparable. Salvage titles are fundamentally an economic decision on the part of the car insurance company. It may not be the case that the car will never function again, but rather, the car insurance company found it wasn’t financially beneficial for them to fix it.
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Should You Buy a Salvage Title Vehicle?
When looking to purchase a car, it can be difficult to find an option that checks all of your boxes, particularly your budget box. While the bargains offered by salvage title vehicles can keep your wallet happy upfront, purchasing a salvage title vehicle may cost you and other car buyers more down the road.
When you buy a car with a salvage title, you risk sacrificing functionality and reliability. As a potential buyer, you may benefit from asking yourself, What is a salvage title vehicle really worth and how much should I pay for a salvage title car?
Pros of Purchasing a Salvage Title Vehicle
For knowledgeable buyers, purchasing a salvage title car may have some benefits, including:
- Repairable damage – Say you’re an experienced mechanic or a self-taught car connoisseur. What is a salvage title to a car that has sustained repairable damage? Salvage title vehicles can be sold for far below the standard rate. This means knowledgeable buyers can save money by purchasing a salvage title vehicle they can repair themselves.
- Affordability – If you don’t have a flexible budget and you need a car as soon as possible, a salvage title vehicle may be a smart short-term solution. What some salvage titles lack in longevity, they make up for in affordability.
Cons of Purchasing a Salvage Title Vehicle
Despite the benefits a salvage title car can offer, consumers should exercise caution when navigating the salvage title vehicle marketplace. You may want to keep an eye out for the following:
- Hidden damage, hidden costs – Not all consumers can tell when a car has been extensively damaged, especially if the previous damage is hidden. For example, if a car is damaged in a flood, it may have severe electronic issues that aren’t visible.
- Scammer sellers – Sellers of salvage title cars are motivated to make repairs as inexpensively as possible to turn a profit. As a buyer, it’s important to ensure your seller isn’t cutting corners for their own benefit.
Ultimately, buyers on the hunt for an affordable and reliable vehicle may want to consider avoiding the salvage title vehicle marketplace. However, the savings that a salvage vehicle allows may work out well for knowledgeable car buffs looking to score a deal and take on a fixer-upper. If you’ve already bought one or are interested in selling a car with a salvage title, there are steps that you can follow.
Insuring Your Salvage Title Vehicle
If you’ve weighed the pros and cons and now have a salvage title vehicle on your hands, you want to make the process of insuring it as painless as possible. Because insurance companies are risk-averse by nature, finding the right insurance for a salvage title vehicle can be tricky. Not to mention, different insurance companies and states play by different rules.
Fortunately, with 4AutoInsuranceQuote, you can compare insurance rates for free and match them with the most affordable rate for you and your budget.
No matter the damage, we’re here to help you, and your vehicle get back out on the open road.