Buying a Used Car with a Salvage Title

You’re browsing car ads and you see one with a price that seems too good to be true. It’s considerably lower than comparable cars -- but it has the words “salvage title” in the ad. You know that you get what you pay for, so what exactly are you getting?

A car with a salvage title means that at some point in its life, an insurance company wrote off the car as a total loss. This is usually because the car sustained damage greater than its actual value, from an accident, flooding, vandalism, or other reasons. The car is then refurbished and given a second life.

Remember, though, that the lower the car’s value is, the less damage it would need to get to the total loss threshold. So a salvage title doesn’t necessarily mean a car was damaged beyond all hope of recovery. Furthermore, while all states have different laws regarding salvage titles, it won’t be back out on a dealer’s lot without meeting state safety regulations.

Also, a car will get a salvage title if it was written off as a total loss because it was stolen, then recovered after the insurance payout. So there’s a chance you can get a salvage-title car with no more damage than normal.

How to buy

Because it’s a risky proposition, here are three steps you should absolutely follow when considering a salvage-title car:

• Have the vehicle inspected by an independent mechanic. This is a good idea, if feasible, for buying any used car, but it’s crucial with a salvage title.
• Buy from a reputable outlet. At least you’ll know what they’re telling you about the car’s history is probably true, which will help you make your decision.
• Get a CarFax report. This will give you a lot of information about the car’s mysterious past life, and will help guide your mechanic in the inspection.

Keep these factors in mind in your purchasing decision.

• Price. If it’s more than 60 percent of the price for a car of the same year, make, model, and mileage with a clean title, the dealer is probably asking too much. If it’s considerably less than 60 percent, though, you might be getting a great deal or you might be getting a car that’s ready to fall apart.
• Resale value. There isn’t any -- or very little, anyway. If you’re looking for a cheap car because you plan to drive into the ground, a salvage title could be a good option. In any other circumstance, it probably isn’t.

Conclusion

“Salvage title” can mean a lot of things happened to that car at some point, all of which are bad but some of which aren’t deal-breakers. The thing is, you just don’t know which issue it has. The key to protecting yourself when buying a salvage title is to get as much information as possible to ensure the car meets your needs.

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