Although car prices are dropping slowly, they’re still super-high compared to where they were before the COVID-19 pandemic. If you need a used car, one option that may have crossed your mind is to buy a car with a salvage title.
In the car-buying world, there’s a major stigma attached to buying salvaged cars, but if you do your homework, you could drive away with a decent ride and some major savings.
Salvage Title: What To Know
- Can I Save Money With a Salvage Title?
- What Is a Salvage Title?
- Is a Car With a Salvage Title Worth It?
- 4 Things To Know Before Buying a Salvage Vehicle
- How To Get a Salvage Title Cleared
Can I Save Money With a Salvage Title?
One of the biggest benefits of buying a car with a salvage title is that the car will typically cost significantly less than a comparable vehicle that is undamaged.
To save money, I actually bought a car with a salvage title at a vehicle auction several years ago. I kept the car for many years afterward, but when I took it in for maintenance, I was consistently reminded that the vehicle was full of aftermarket parts.
In this crazy vehicle market, money expert Clark Howard says you can save a lot of money by buying a salvage title — but you need to do your homework.
“It’s very possible if you are very careful to buy a salvage title vehicle, one that was totaled by an insurer, and have something that’s safe to put on the road and you can feel comfortable with it,” Clark says.
“But you’ve got to know what you’re doing. Because if not, you could end up with something that’s nothing but trouble.”
In this article, I’ll tell you everything you need to know about buying a car with a salvage title as well as some tips you need to know before you purchase one.
Of course, you’ll need to be meticulous in your research if you make the decision to buy a car with a salvage title. Let’s get into it.
What Is a Salvage Title?
A salvage title on a car means it has lost significant value typically due to an accident, hail damage or another misfortune like vandalism or fire.
“A lot of insurers now will also total a car that is in no way severely damaged,” Clark says. “It could be as simple as the airbags deployed in the vehicle.”
You can find salvage titles at auctions, but Clark says you can also find them at dealerships.
“I should mention a lot of times in the disclosures now, you’ll see that the dealer selling the vehicle, and sometimes they are specialty dealers like you’re talking about, will put right in the listing that it is a salvage title vehicle,” Clark says.
“And makes you aware up front that that’s what you’re getting into.”
For many consumers, a more common route to a salvage title is when your current vehicle is involved in a crash and the insurance company determines that it’s cheaper to label the car as a total loss, effectively making it a salvage title.
Is a Car With a Salvage Title Worth It?
It’s no secret that buying a salvage car comes with a degree of risk, but if you’re educated about what’s involved, you could greatly minimize the chances of losing your hard-earned money.
My experience with a salvage title car was typical in that I paid cash for the vehicle and didn’t need to get it financed.
Salvaged cars are not typically rated in Kelley Blue Book or other automotive standard-bearers. That makes determining the value of a salvage car very subjective. Many dealerships are reluctant to accept a salvage title car as a trade-in, making private sales the only alternative. Additionally, getting such vehicles financed may take some work as lenders will want certain conditions met and perhaps a higher down payment.
According to Kelley Blue Book, “A salvaged, reconstructed or otherwise ‘clouded’ title has a permanent negative effect on the value of a vehicle. The industry rule of thumb is to deduct 20% to 40% of the Blue Book® Value, but salvage title vehicles really should be privately appraised on a case-by-case basis in order to determine their market value.”
The main upside to buying a salvaged vehicle is that you can score a perfectly serviceable car for thousands of dollars cheaper than you typically can through a dealer. You also don’t have to worry about a salesperson pressuring you into making a purchase. Buying a salvage car is something that can and should be done at your own pace.
4 Things To Know Before Buying a Salvage Vehicle
1. Buy From a Reputable Source
Do your homework on the seller. Don’t buy from someone on the side of the road or in a chop shop. At the same time, even if a business or owner seems legit, check them out online before you hand them a check.
Don’t hesitate to read reviews from multiple sources. Here are some ways to find out whether a business is legit or not:
- Google reviews
- Trustpilot (Team Clark’s review)
- Better Business Bureau (Team Clark’s review)
2. Get the Original Repair Estimate
The insurance company should be able to provide you with the original repair estimate that they quoted early in the process. This document will help you have an idea about what repairs should cost.
3. Have the Car Inspected
It’s always a good idea to have a mechanic with you during the inspection process. If not, see if you can get the car to a body shop. This way, they can alert you to any issues you may not see and objectively tell you about repair costs.
Clark wants you to use a mechanic with ASE (Automotive Service Excellence) credentials, which means that he or she has completed rigorous training and education on the fundamentals of auto repair and maintenance.
Read our guide on how to find a trustworthy mechanic.
4. Do a VIN Check
Always know the history of a vehicle before you buy. A VIN check, which you should never pay for, will give you a detailed look at the car’s past life so you have an idea of what you’re getting.
Read up on how to get a free VIN report.
If you answer in the affirmative to all of those questions, it’s time to think about how you’re going to get the car’s salvage title “cleared” or removed.
How To Get a Salvage Title Cleared
The first step in getting a salvage title cleared is to find out whether repairing the car is in your budget. If it is, your state will typically require that you pay a fee to apply for a title restoration, then it will have to pass a safety inspection.
In Georgia, where I live, a vehicle with a salvage title must go through an inspection process, which includes an application fee.
You’ll typically need to provide:
- An affidavit as proof that the vehicle has been inspected.
- Proof that all applicable repairs have been made.
- A completed rebuilt/reconstructed title application with your local Department of Motor Vehicles (DMV).
According to JD Power, “The DMV requires you to submit the bill of sale, the salvage title, the photos, and other documentation. The pictures of the process come in handy while applying for the inspection.”
Once you do all that paperwork, you’ll await a “clean” or “cleared” title from your DMV. On the document, it will state that the vehicle once had a salvage title.
That disclosure will typically trigger a valuation that is below fair market value.
Pros and Cons: Buying a Salvage Title Car
| Pros | Cons |
|---|---|
| The price may be substantially less than a comparable car without damage. | You must go through a rigorous application and inspection process to get the car back on the road. |
| You won’t have to deal with high-pressure sales tactics from a dealer. | The car will be worth less than fair market value. |
| It’s an alternative way to get a late-model vehicle. | Dealers won’t typically accept salvage titles as trade-ins and it may be difficult to get financing. |
Final Thoughts
For the budget-conscious shopper, a salvage title may be just what your wallet needs, but it can’t be stressed enough how much research you need to do before purchase.
Remember these tips:
- Buy from a reputable seller.
- See if you can get the original repair estimate.
- Get the car inspected.
- Do a VIN check.
“The biggest area of hassle when it comes to salvage title vehicles is flood cars,” Clark says. “Because those are nothing but trouble for the entire time you would ever end up with one.”
Want more car-buying tips? Read up on how to avoid flood cars.
