What Is a Salvage-Title Vehicle? | Edmunds.com
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What Is a Salvage-Title Vehicle?

A Car Shopper's Guide to "Junk" Titles


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You're browsing the used car ads when a vehicle grabs your attention. The car you are interested in has a price that seems too good to be true. You keep scanning the page until you see two words in small print: "salvage title."

A salvage title is potentially a red flag, but the cars that carry them can be inexpensive options for car shoppers on a budget — provided you know what you are buying.

When a vehicle has been in an accident and the total damage exceeds a certain percentage of the value of the car (ranging from 75-90 percent), the insurance company will decide that it is not economically feasible to repair it and declares it a "total loss." What happens next varies by state, but in general, the motor vehicle agency will then issue a "salvage certificate" to the car. This means that the car cannot be driven, sold or registered in its current condition.

Usually, the insurance company sells the car to either a repair facility or parts dismantler. If the car is repaired, most states require that it pass a basic safety inspection before the motor vehicle agency will issue a new title. When the state does issue the title, it's "branded," and notes that the car has been salvaged or rebuilt so future owners are aware of its past.

Different Kinds of Damage
A car with a salvage title hasn't always been in a collision, however. Mark Binder, national salvage manager for Farmers Insurance, says that there are a number of reasons why a vehicle might get a salvage title:

  • Flood damage: Flood-damaged cars sometimes get a salvage title. Some states will specifically call out flood damage on a car's title, but other states merely use the term "salvage title."
  • Hail damage: As with flood cars, the titles of vehicles that are damaged by hail can also get a salvage title if the state does not have a specific "hail damage" designation on the document.
  • Theft recovery: After a vehicle has been stolen and is missing for a certain period of time, the insurance company will pay off the vehicle. If the vehicle is eventually found, the insurance company is free to sell it to a salvager, which will replace any missing parts. Some states will then issue a salvage title for the car.

    According to Carfax, a company that sells vehicle history reports, the following states issue a salvage title after a car has been stolen: Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma and Oregon.
  • Vandalism: If someone spray-painted or overturned a vehicle and caused enough damage, the car could get a salvage title. No states specify vandalism in the title, however. It will likely be issued a salvage title.
  • Non-Repairable: A severely damaged and non-operable vehicle with no resale value other than its parts can get a "non-repairable" designation, which some states call a "junk title." In these extreme cases, the state won't allow the vehicle to be repaired and it must either be sold to a scrap yard or destroyed. "Non-repairable" isn't a salvage title per se, but it is important to be aware of the term, just in case you come across a vehicle that's been labeled this way.

Should You Buy a Salvage-Title Car?
There isn't a definitive answer to this. It depends on how comfortable you are with buying a car that has a checkered past. On one hand, salvage-title vehicles can present a value for a first-time buyer, someone on a budget, or someone in need of a second vehicle. In general, buyers can get salvage-title vehicles for two-thirds the price of a car with a clean title, says Richard Arca, pricing manager for Edmunds.com. He adds that luxury vehicles tend to take a greater hit in value when they get a salvage title.

On the other hand, some salvage-title vehicles can be more prone to mechanical problems and have issues with resale value. Mark Binder of Farmers Insurance says there are three things that consumers can do to help minimize the risks of buying a car that will let you down:

1. Have the vehicle inspected: This is one of the most important things to do if you're considering the purchase of a car with a salvage title. Bring a mechanic with you for an inspection. You might also arrange to take the car to a body shop. A car professional will have a better idea about whether the repairs were done correctly and can spot any red flags, such as frame damage or parts that still need repairing.

2. Purchase the vehicle from a reputable repairer: Search for online reviews of the facility that's selling the vehicle. If it's one that's known for making quality repairs, buying a salvage-title car there may be less risky than purchasing from someone without a track record.

3. Ask for the original repair estimate: The best way to determine how extensively the car was damaged is to look at the original repair estimate. This will show you what parts were replaced and how serious the accident was — or if there was an accident at all. Maybe the damage happened in some other way.

If you have any questions about buying a salvage-title car, please reach out to the Edmunds.com Live Help team for free assistance.

Insurance Implications
Most insurance companies will insure a salvage-title vehicle, but if you happen to get into an accident, the total loss payout you'll receive will be much lower. This isn't necessarily a deal breaker, but it is something to consider when you're determining how much car insurance you need.

Resale Troubles
Owners of salvage-title vehicles will encounter some unique issues when they try to sell or trade in their vehicles.

"Most franchise dealers will not take a salvage-title vehicle as a trade-in," Arca says. "Your only options are selling it to a private party or an independent dealership — and they won't give you very much."

Determining the value of the vehicle will also be a challenge. Most appraisal Web sites, including Edmunds.com, assume a car has a clean title, no matter what condition level you select. "Even a vehicle in 'rough' condition can still have a clean title," says Arca.

Since you will most likely be selling the vehicle to a private party, our advice is to use the price you paid for the salvage-title car as a starting point in your sale negotiations. If you've driven the vehicle for a few years, deduct a couple thousand dollars. Test the market with a price higher than what you have in mind and work your way down until you get the offers you're looking for.

Finally, don't hide the fact that your vehicle has a salvage title. If you do, it's considered fraud. The buyer will find out eventually when you hand over the title, or if he obtains a vehicle history report. Honesty is the best policy when it comes to cars with a colorful past.


To find a dealership that knows how to treat shoppers right, please visit Edmunds.com's Dealer Ratings and Reviews.

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Comments

  • dalbee dalbee Posts:

    Most salvage cars are not repaired by a profesional repair vacility, but buy unliscensed car dealers who are patching these cars together for a quick buck, and selling them to unsuspecting buyers as their personal cars. I am told that salvaged cars comeing from outside of California, are registered in California with a clean title. A auto check report should be run to uncover these cars. Doug Albee

  • esmie esmie Posts:

    i rather drive a 2013 salvaged than a 2003 model sold by a dealer at a top dollar, it is obvious this whole ad is fabricated by a dealer. a salvaged car can be a great deal, i personally drive an excellent salvaged car. and all it took was a good research as the one i found at msn.money type in will the recession total your car, along with an inspection by a local shop, i had my husband done the inspection himself. also the car show in the ad is called a non repairable and it is stamp on the title, that is a big dealer lie.. god bless and good luck on your search.

  • hemiguy350 hemiguy350 Posts:

    I have driven salvage/rebuilt title cars for over 15 years and have been very satisfied. I purchased mine from Feretti Motors in PA and have had good luck with them. If you can pay any less than 20-30% from what a clean title car goes for you should be in good shape.

  • cmhj2000 cmhj2000 Posts:

    Better this then being ripped off by a dealer for his so called late model gem.

  • isellhondas isellhondas Posts:

    On an older car that has little value, it doesn't take much with todays body shop prices to total a car. A minor collision that does little damage can create a perfectly good car that will carry a branded title. On the other hand, I wouldn't touch a late model otherwise nice car with a salvage title. I know of a guy whose car was totaled when his car was stolen and then recovered with most of the interior and some other parts missing. His insurance company paid him off and then offered the car back to him at the salvage price. He bought it, found the missing seats etc in a wrecking yard and basically brought the car back to it's original condition. He now has a car with a branded title. When he finally sells it it's value will be affected and there will be those people who wouldn't touch it but he does have before and after photos and a story to tell.

  • It really pays to know the history of the damage before you buy a salvage title vehicle. It could be an okay purchase, but the more you know, the better off you'll be. On some cars, like exotics, a salvage title is the kiss of death and the car is basically unsaleable.

  • texases texases Posts:

    Why doesn't the article address the HUGE impact on value? Rule of thumb is a 50% discount. I'd rather buy an older or cheaper used car without the many problems posed by a salvage title.

  • isellhondas isellhondas Posts:

    The older the car gets and the lesser the car the less a Salvage Title will affect it's value. I wouldn't buy one unless it were something older and not worth a lot and only then If I knew the circumstances surrounding the branded title. I would want to see photos etc.

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