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Salvage Titles: What You Need to Know (Updated September 2022)

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Charlie Mitchell

By: Charlie Mitchell

Edited by Jackie Cohen

Updated September 15, 2022

Cars get totaled all the time. It doesn’t always mean they’re junk: it only means that the insurance company decided that the costs to repair the car were too high relative to the car’s value. As a result, the car is deemed a “total loss” and issued a new title called a salvage title. Then, it’s usually bought by a scrap yard and sold for parts or fixed up and re-sold.

If you’re shopping for used cars and see “salvage title” in the description, you’re looking at a once-totaled car. This could mean a lot of things when it comes to the car’s history, but it means one thing for sure: finding an auto insurance policy for a salvaged car won’t be easy. More than ever, you’ll want Insurify to hunt for quotes on your behalf and dishing them to you for free.

Quick Facts

  • Salvage title vehicles are cheap but very risky.

  • Insurance for salvage title cars can be expensive and hard to find.

  • Salvage title law varies by state, so do your research.

What is a salvage title?

Should I avoid a salvage title?

You can’t insure a car with a salvage title in California since they’ve been declared a total loss. In most cases, it’s best to avoid a salvage title.

You might be curious what “salvage title” means because you saw a very cheap used car listing, got struck by temptation, and saw “salvage title” in the description. This is how most prospective buyers of salvage title cars get hooked on the concept: you see a price from a previous owner that looks too good to be true, and it turns out the salvage title is the catch.

A salvage title is issued by a department of motor vehicles (DMV) when a car is deemed a total loss. In general, this means the insurance company has assessed that the repair costs to make a car roadworthy again exceed a certain portion of the car’s market value, usually between 60 and 90 percent. This varies by state.

That means that this car may be cheap, but it’s going to be a lot of extra work and risk compared with a clean title vehicle. That said, it might not be a deal-breaker. A lot of cars get salvage titles and are not that far off from being roadworthy. But a salvage title vehicle is not legally drivable until it passes inspection from the DMV and gets a new title.

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How a Car Gets Issued a Salvage Title

Many paths can lead a car to being declared a total loss. Sometimes, cars that are still in pretty good shape can be “totaled” but fixable with some easy tweaks or, in rare cases, totally drivable. Here are a few reasons that cars wind up being declared totaled.

Stolen vehicles in some states are issued salvage titles if they are abandoned and picked up by the DMV. This means they might be in fine condition but receive a salvage title nonetheless.

Flood damage can quickly overwhelm a car’s electrical system and make repairs challenging and costly, leading to a salvage title.

Accident damage from a serious wreck or series of wrecks can make very expensive bodywork on the vehicle necessary to get it back on the road. This is the most likely scenario for a salvage title. An accident on your driving record is a bad sign because it’s possible that parts of the car can sustain hidden damage that only emerges after a while.

Reasons You Might Buy a Salvage Title Car

Remember, a salvage title gets issued when the cost of repairs don’t compare well with the car’s value, but this means that some cars in decent shape can get issued salvage titles. Sometimes, a vehicle owner will reject the insurance company’s buyout to retain a salvaged car, fix it up, and sell it if they know it hasn’t suffered severe damage.

There are also dealerships that specialize in refurbishing salvage vehicles. If you decide to check out cars from one of these car dealers, do your research before trusting them—their quality and credibility can definitely range.

But all that being said, there are some cases when a salvage vehicle can be much cheaper than a standard used car because it takes lots of effort and risk to fix up and get registered and insured. Hobbyists take great pleasure in reviving salvaged cars and motorcycles. Used cars require lots of research and due diligence, but even more so when it comes to salvage.

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Reasons to Avoid Buying a Salvage Vehicle

All used cars come with the risk that the previous owner has misled you on the vehicle’s history and resale value. But in the case of salvage vehicles, it’s a whole new ballgame. You’ll want to really know what you’re doing, and have some people around you who are trustworthy and knowledgeable, before you proceed to buy a salvage vehicle. Here’s why:

High Repair Costs

This happens most often when a car has been totaled from a serious accident. To be reasonably sure that your salvage title vehicle doesn’t have hidden damage, you’ll need a very trustworthy mechanic and body shop willing to take a long look at the car.

Void Warranties

Sometimes, salvage dealerships provide warranties on their repaired vehicles. But the original warranty from the car’s manufacturer? Forget it.

Fraud

Odometer fraud and other shady business are a serious risk: When salvage vehicles get issued new titles and handed over to auctions, scrap yards, and private buyers, there’s the opportunity for fraud to occur before it re-emerges on the market, sometimes after crossing state lines. This is why a thorough history of your salvage car is so vital.

Loan Difficulties

Lenders don’t see salvage title cars as a sound investment, so you might be turned down for a loan or two if you’re trying to finance this purchase.

Expensive Insurance

Because salvage title cars so often have hidden problems, car insurance companies will charge you high premiums to insure your salvage title car and their market value is hard to ascertain.

Depreciated Value

Dealers and other car buyers will be suspicious of a branded title, and you’ll have a hard time selling a salvaged car unless you lower the price substantially.

Once you buy a salvage title car, it’s a very difficult investment to recuperate. If your personal finances aren’t prepared to absorb the sunk cost of a vehicle that has a good chance of creating more problems than it solves, you probably aren’t ready for a salvage title car.

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Important Things to Do Before Buying a Salvage Vehicle

Research salvage title laws in your state: Do some research on how your state DMV handles salvage titles and why cars are issued them. If the bar is pretty low, you might be in a state that has some robust salvage vehicles floating around.

Bring it to a repair shop (and consider a body shop as well) operated by someone you trust who’s willing to give the car a real once-over to see if there are any red flags regarding prior damage. Without the advice of someone who knows what they’re talking about, you probably shouldn’t buy a salvage title car.

Look into the vehicle identification number (VIN) from the National Motor Vehicle Title Information System, and pay for a report that gives you a more comprehensive vehicle history. But remember, these are often incomplete and don’t tell you the whole story!

No matter what type of title the vehicle has, a vehicle history report from CARFAX is vital to understanding what you’re getting into. This can help you spot fishy patterns that might obscure title washing, where a vehicle’s title can be falsified or altered, often when it crosses state lines. Look out for unexplained gaps and mileage discrepancies!

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Getting a Clean Title for Your Salvage Title Car

When you, a repair shop, or a car dealer has done the necessary repairs on a damaged vehicle, you can take it to the DMV and get it inspected. If it passes, the DMV will issue the car a “rebuilt title.” A rebuilt title is also called a branded title, and it’s not the same thing as a clean title.

Rebuilt vehicles are good to drive like any other car, though keep in mind that the value of the car will be far lower than the value of a comparable car with a clean title. Unfortunately, your car’s branded title will always bear red flags if you try to sell or insure it. Car buyers and dealerships will pay less for it if they buy it at all, and some insurance companies will pass.

How to Insure Your Salvage Vehicle

Be warned: not all car insurance companies will sell you a policy for a car with a salvage title, and when they do, it may be expensive. If you already have car insurance, check with your insurance provider to see if they’ll cover it. Because it can be hard to estimate a car’s market value, not all car insurance companies will provide your car with a full-coverage policy.

Frequently Asked Questions

  • When an insurance company deems a car totaled and not worth repairing, the DMV issues a salvage title, and the car cannot be legally driven until it obtains a rebuilt title by passing a thorough DMV inspection.

  • Salvage title cars are cheaper than comparable vehicles on the market, but they come with real risk. Hidden damage can explode the vehicle’s repair cost after you’ve brought it to a mechanic. Before you buy, get a salvage title car checked out thoroughly by a repair shop that you trust, and do all the research you can on the car’s VIN to know its history.

  • If your salvage title car is fixed up and ready for the road, bring it to your state DMV and set up an inspection. Then, if it passes, it will be issued a rebuilt title, also called a branded title. You can’t get a clean title for your salvaged car. But you’ll be ready to drive.

  • A chunk of insurance companies won’t insure salvage vehicles. If you like your insurance company, call them first to see if they’ll insure your car with a salvage title. For a bird’s-eye view of all your best options, spend a few minutes with Insurify, and you’ll get a slate of real quotes just for you, totally free.

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Charlie Mitchell
Charlie Mitchell
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Insurance Writer

Charlie Mitchell is a journalist, researcher, and writer specializing in personal finance subjects. He holds a degree from Middlebury College. His work can be found in Vox, Mother Jones, The New Republic, and other publications. Charlie uses his expertise in home, renters, and auto insurance subjects to help inform people to make better financial decisions. Connect with Charlie on LinkedIn.

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