What Is a Salvage Title Vehicle and Are They Worth Buying?

What is a salvage title?

A car's title is essentially its record of ownership. It tells you how many people have owned the vehicle, how many miles it's been driven (with exceptions), and if it's been damaged or stolen. When a car is damaged to the point that its repair costs exceed its value, an insurance company will "total" the car and it will get a salvage brand on its title. The car is then typically sold at an auction to a person or company that will either sell it off piece by piece or, in some cases, fix it and sell the car to a new owner once it has passed a safety inspection. This car will usually come with what's called a "rebuilt salvage" title.

If you've spent time looking at used car listings on any number of websites, you've likely come across examples of cars that are considerably cheaper than the rest. At first glance, one of these cars can look like a great deal, but then you see that the car comes with a salvage title. What does that actually mean? Is it something you'd only buy for parts, or can you potentially use a salvage title car like a regular car? Don't worry. We're going to explain it all for you.

Jump to:
Are salvage title cars a good deal?
What kinds of damage can cause a salvage title?
Should you buy a salvage title car?
Buying and insuring a salvaged vehicle can be tough

Are salvage title cars a good deal?

When you come across a salvage title car online, it can sometimes be hard to determine what happened to the car that made it salvage and gave it that super low price. Cars are most commonly branded with salvage titles due to collision damage but can also be totaled for flood damage, theft, or manufacturer (lemon law) buyback. There are other reasons as well, but they aren't as common.

Not all these issues cause visual damage, and even when there is visual damage to a vehicle, it may be nearly impossible to tell whether the people who rebuilt it did a good job. Some salvage cars can, in fact, be a great deal if you buy from someone who took the time to repair the damaged vehicle properly. Unfortunately, more people slap repairs together with the minimum amount of parts and labor in order to make a profit, and you could be buying into more trouble.

What kinds of damage can cause a salvage title?

A vehicle might get a salvage title for a number of reasons, including:

• 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."

• Hail damage: As with flood cars, 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, 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.

• Vandalism: If someone spray-painted a vehicle or otherwise caused enough damage to it, the car could get a salvage title. No states, however, specify vandalism in the title — just "salvage."

• Non-repairable: A severely damaged and non-operable vehicle with no resale value other than for 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 in case you come across a vehicle that's been labeled this way.

Should you buy a salvage title car?

The short answer is probably not. It's a big risk and unless you know what to look for, it's easy to get burned and buy a car with more serious damage than you thought or one that's had shoddy repair work. That said, if you're committed to a certain car, then there are steps you can take to reduce your chances of having a bad experience. These include, in no particular order:

1. Have the vehicle inspected: This is one of the most important things to do if you're considering the purchase of any used car, much less one with a salvage title. Bring a mechanic with you for an inspection or ask if you can take it to your mechanic. You might also want to arrange to take the car to a quality body shop. A professional will have a better idea about whether the repairs were done correctly and will be more likely to spot any red flags like 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 known for making quality repairs, buying a salvage title car there might be less risky than purchasing from someone without a track record.

3. Ask for the original repair records: The best way to determine how extensively the car was damaged is to look at the original repair records. Doing so will show you what parts were replaced and how serious the accident was — or if there was even an accident at all. For example, hail damage is common in the Midwest, and flood damage is common in states prone to rainstorms and hurricanes.

4. Get a vehicle history report: A good way to check whether a vehicle has been salvaged is to run a vehicle history report. A report can shed light on when and where the accident occurred. Vehicle history reports are also a good way to verify whether a car seller's claim of a clean title is accurate or not. Some vehicle history reports will even include photos of accident damage prior to repairs, which can give your mechanic or body shop a better idea of the kinds of fixes undertaken.

Buying and insuring a salvaged vehicle can be tough

You found a car you love, your mechanic said that it's in good shape, and you negotiated a killer deal. Now you want to buy it, but your troubles may be just beginning, particularly if you want to finance the car.

1. You might not be able to get a car loan: Banks and credit unions shy away from car loans on salvage title vehicles. They worry that cars that suffered enough damage to be declared a total loss might have weakened structural integrity and might not make it through another accident. Another concern is that, down the line, the cars might need a major repair that the borrower wouldn't be able to pay for, leading to a higher risk of repossession. Banks only want to provide money for vehicles that will last the length of their loans, and salvage vehicles don't have a great reputation for longevity. Banks are a little more forgiving when it comes to hail damage, which is often more of a cosmetic issue than a mechanical one, but you still might not get all the money you're looking for. 

2. You'll have to work harder to get car insurance: You will probably be able to get the liability insurance that's mandated in most states for a salvage title car that has been rebuilt or repaired and inspected, said Lynne McChristian, a spokesperson for the Insurance Information Institute. Because it's a salvage title car, it's riskier to insure, and you might have to pay more than you would for a car with a clean title.

Getting comprehensive and collision coverage is likely to be more difficult because an insurance company can't be sure the vehicle is up to the same safety standards as a car that's never been declared a total loss.

3. You will have fewer options when it comes to trade-in or resale: Most franchise dealers simply will not take a salvage title vehicle as a trade-in. Your main options are to sell it to a private party or an independent dealership — and it won't give you very much.

Determining the value of the vehicle upon purchase will also be a challenge. Most sites that offer car appraisals, including Edmunds, assume a car has a clean title no matter what condition level you select. Even a "rough condition" vehicle with a clean title will likely have more residual value than a car with a salvage title.

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 some money for the increased mileage and added wear and tear. Test the market with a price higher than what you have in mind and work your way down until you get an offer you're looking for. Prepare for the process to take a while.

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