While shopping for a used vehicle, you will likely come across more than one deal that seems too good to be true. Although some lucky car shoppers will find a great deal every once in a while, chances are that if you find your dream vehicle priced below market value, you may see the words “salvage title vehicle” somewhere in the description.

A vehicle’s title can tell you a lot of important information, especially regarding the car’s condition. Every used car has a history, and when it’s a salvage-titled car, there are usually some hiccups in the car’s history you should be aware of.

If a car is in good working order with no substantial damage reported, it is likely to have a “clean title.” After a catastrophic event such as a car accident or a natural disaster, a car insurance company may deem a vehicle a “total loss” or not worth repairing. If the car is “totaled,” the cost of vehicle repairs is higher than the vehicle’s market value, and a salvage title will be issued.

Ultimately, the determining criteria for whether or not a vehicle is a designated salvage title vehicle varies by case, insurer, and state, which can affect the repair, resale, and insurance costs. However, even though a salvage car does come with a few weighty considerations, it doesn’t always mean it’s bound for the junkyard, either.

Salvage Title Causes and Considerations

When a damaged vehicle is no longer safe to drive on the road, it may be issued a salvage title. However, that threshold between drivable and non-drivable varies by state and car insurance provider. In some cases, this means that the cost to get the vehicle up to par is greater than the market value of the vehicle before the accident. In others, it means car repairs are more than half of the fair market value. No matter where your state stands, once your vehicle has a salvage title, it isn’t legally drivable until the necessary repairs are complete.

Most commonly, a salvage title comes from a total loss declaration due to a major motor vehicle accident that results in expensive vehicle repairs. You can run an online vehicle history report (like a Carfax or DMV record) to find any accidents or issues. If your report turns up a salvage title, it can also be a result of:

• Catastrophic weather events (flood, earthquake, hail, wildfire, or tornado)
• Theft and recovery
• A natural disaster struck the car dealer, but the vehicle wasn’t necessarily involved
• Significant aftermarket parts
• Riot damage
• Kit car
• Parts car
• The owner didn’t want to total the vehicle
• Antique or classic car

Salvage Title vs. Rebuilt Title

A salvage title is not the same as a rebuilt title. A salvage title is not legally allowed to operate on public roads. However, a totaled vehicle isn’t necessarily destined to be scrapped for parts. Sometimes, the insurance provider will sell a car they’ve “totaled” out to help recuperate some of the financial cost of their insurance claim payout. In other cases, the vehicle owner may choose to keep the vehicle. In either of these cases, a salvage title would be issued until repairs are made. A rebuilt title means that although the car was once a salvage title vehicle, it is now safe to drive.

Insurance companies and salvage car owners can apply for a rebuilt or reconstructed title after the vehicle has undergone the necessary repairs. Once the owner has completed extensive documented repairs and the vehicle passes a thorough inspection with a qualified inspection station, the salvage title status will be cleared, and a rebuilt title will be issued.

Purchasing Complications

If you’re serious about buying a car with a salvage title, you should start by investigating the laws in your area. Only a licensed car rebuilder can buy a salvage title car in some states.

Qualified buyers should also plan to pay cash for a salvage vehicle. Many lenders won’t offer a vehicle loan to cars in this condition since there isn’t a guaranteed return on investment. Those lenders that do finance salvage titles often charge higher interest rates.

Financial Implications

Buying a used vehicle with a salvage title can save a lot of money when you’re buying a car. In fact, a salvage title often reduces the seller’s asking price by 5%-10% below the current market value of a clean title vehicle. However, saving money upfront may not be worth the long-term financial implications.

For starters, according to Kelly Blue Book (KBB), a salvage title car is worth 20%-40% less than its clear titled vehicle counterpart. Not only is there the possibility for immediate upside-down valuation, but there are additional financial concerns to consider, including:

• Initial repair costs to make the vehicle roadworthy
• Costs to have it inspected and appraised
• Pricey car insurance premiums, if you can find an insurer
• Higher lender financing rates
• Reduced likelihood of saleability

Safety Concerns

Unfortunately, with salvage title vehicles, there are also inherent safety concerns to consider. The extent of the damage may go far beyond what is seen on the surface and may even extend to the vehicle’s structure. Many of today’s vehicle models are built to flex, bend, and absorb impact during an accident. Unfortunately, the frame cannot be bent back into place in most cases without losing structural integrity. Even if it can be done, the material is weakened and isn’t approved to protect you or your passengers in an impact.

In some cases, the damage may still be unidentified. For example, in the event of flood damage, severe damage may go unnoticed for months or even years before discovery. Moisture, mold, and corrosion often hide under seats, carpets, and in hard-to-see areas, making it a prime location to go unnoticed longer, compounding the flood damage.

Buyer Beware: Evaluating Salvage Title Vehicles

Did you find a deal on a salvage title vehicle that is just too good to pass up? Salvage vehicles often come with hidden damage, unforeseen insurance difficulties, and resale issues, just to name a few of the obstacles you may face.

Before you sign any purchase agreement, you should know what you’re getting into. Since salvage title cars are more difficult to sell, you should be prepared to drive them, for better or worse, until the wheels fall off. You can reduce the risk of inheriting a money pit by doing your due diligence before buying a salvage car.

3 Tips for Buying a Salvage Title Vehicle

Try these steps to save you time, money, and frustration with the wrong car:

1. Conduct Thorough Car Inspections

As a general rule of thumb, it is a good idea to get a pre-purchase vehicle inspection before buying a pre-owned vehicle. Whether you’re buying a vehicle from a used car dealership or a private seller, it is important to have a professional inspect it for any mechanical, safety, or aesthetic concerns. Not only is a thorough diagnostic exam a valuable tool in your price negotiations, but the pre-purchase inspection (PPI) ensures that the vehicle is safe to drive or, in the event of a salvage vehicle, that you are aware of all of the necessary repairs.

2. Obtain a Vehicle History Report

Did the vehicle have regular oil changes before its salvage title? What repairs have been completed? Were they completed by an ASE Certified mechanic, body shop, or vehicle repair shop?

Although the seller may have extensive experience in rebuilding cars as a hobby, detailed vehicle repair histories can make the difference in the vehicle appraisal and inspection to determine if it’s roadworthy. If the seller doesn’t have proof of repairs, you can use websites like vehiclehistory.gov, carfax.com, autocheck.com, or vinaudit.com to see maintenance records and repairs. Make sure that the repairs are completed with high-quality replacement parts by a trained professional.

3. Consult with Car Repair Professionals

When buying a used vehicle, you agree to buy a vehicle as-is with no guarantee or warranty (unless you’ve been offered an extended car warranty by a car dealership or a third-party warranty provider, like Endurance). Although we all hope that a seller is being honest with us, it’s up to the buyer to take the steps necessary to ensure that the vehicle is what you want. The deal is done once you’ve paid the seller, and any repairs will become your financial responsibility.

Therefore, it is important to discuss the vehicle with a trustworthy mechanic. Let them know your goals for the vehicle and allow them to offer honest feedback about whether or not this is a sound investment based on your needs and lifestyle.

How to Rehabilitate a Salvage Title Vehicle

Although a salvage car may have substantial damage, there are steps you can take to clear the salvage title status. You can apply for a rebuilt title when you’re ready to get your vehicle back on the road, but before applying for a new title, you have to follow these steps:

Make Required Repairs

The first step to rebuilding a salvage title is making necessary repairs. Whether it needs a rebuilt engine, fresh doors, wheels, or a new windshield, the vehicle must be considered road safe, not just for the driver and their passengers but others on the road. Be sure to document any and all repairs along the way with receipts and before and after photos. This will help with the next phase.

Pass a Vehicle Inspection

Before you can legally drive your rebuilt vehicle, an inspection station must do a thorough inspection to make sure nothing was missed. Since it isn’t road-legal yet, have your vehicle towed to a trusted inspection station. Be sure to bring any necessary paperwork, such as:

• Bill of sale
• Photo ID
• Vehicle Identification Number (VIN)
• Progress photos (before and after)
• Title
• Receipts for parts and services

Apply for a Rebuilt Title

Once your salvage title vehicle passes a vehicle inspection, you can officially apply for a rebuilt or reconstructed title. Each state has unique form requirements and fees, so be sure to look at your state’s requirements before heading to the title office.

Extended Warranties and Salvage Titles

Buying an extended car warranty for salvage vehicles can be a challenge. Most extended warranty providers exclude salvage title cars from their warranty coverage plans because there is an increased risk of unexpected (and often expensive) mechanical breakdowns. While finding an extended auto warranty, also known as an auto protection plan or a vehicle service contract, may be difficult, it isn’t impossible.

Unlike other warrant providers, Endurance Warranty provides options for vehicle owners looking to protect their rebuilt or rehabilitated vehicle. Salvage cars that have been rebuilt may be eligible for helpful warranty coverage plans. However, you may be required to show:

• Documentation of the rebuilding process (parts used, reputable mechanic, etc.)
• Satisfactory inspection

Our Endurance Advantage auto protection plan offers many benefits for salvage or rebuilt vehicles. Advantage offers comprehensive protection, including up to $3,500 annually in routine maintenance and oil changes. Plus, every Endurance Warranty plan includes bonus perks like 24/7 roadside assistance and towing, travel interruption coverage, and rental car reimbursement.

You can choose to maximize your savings by activating the Endurance Elite Benefits package for a one-time activation fee. With this, you’ll save even more on tire replacement and rotations, key fob replacements, and more.

Pros and Cons: Is a Salvage Title Vehicle Right for You?

If you’re deciding whether a salvage title vehicle is the right move for your lifestyle, it is important to carefully consider all of the risks and responsibilities associated with salvage title ownership. We’ll explore some of the pros and cons of owning a salvage title auto.

Pro: Savings

If you’re in the market to buy a new or used vehicle, you’ve likely seen that the price of vehicles has gone up in the last few years. Buying a car with a salvage title is one way to get a new-to-you vehicle at a reduced price.

Con: Repair Costs

Although buying a salvage title vehicle can save you money upfront, it isn’t legal to drive until it’s undergone serious repair work. The repair work and inspection process takes both time and money, both of which may offset any of the initial savings at purchase.

Pro: Get Your Dream Car

If you’ve got your heart set on a specific hard-to-find older vehicle, chances are, the ones in great condition are already owned by other collectors. If you’re feeling nostalgic or daydreaming about having a classic muscle car or rare vehicle, a salvage auto may be an ideal solution. You can find a “fixer-upper” and make it run like new.

Con: Safety Concerns

Any vehicle that has sustained enough damage that it is considered salvage may have some safety considerations. Even if a car is repairable, you’ll want to be sure that only the highest quality parts are used and the work is completed by a professional or an ASE Certified mechanic to avoid potential mechanical failures.

Pro: Making Memories

If you prefer to do it yourself, putting in the work to feel the sense of accomplishment that can come with finishing a big project, a salvage vehicle may be a great hobby to start.

Con: Insurance Complications

Insuring a salvage title vehicle can also be a challenge. Often, because the vehicle isn’t worth as much as its clear-titled alternative, many auto insurance companies won’t insure salvage-titled vehicles, and those that do often do so at a higher premium.

Con: Future Resale Value

Unfortunately, the market for selling a salvage or rebuilt title is small due to the inherent associated risks. If you buy a salvage title auto, you should plan to hold onto it or even pass it down to future generations.

Ask About Endurance Warranty for Salvage Title Vehicles

Any vehicle can break down unexpectedly, but salvage title vehicles may be more susceptible due to their previous damage. Don’t get caught with another unexpected and expensive car repair bill. An Endurance auto protection plan is just what you need.

Call (800) 253-8203 to request a FREE quote for your salvage or rebuilt car. Our plan advisors can help you customize coverage based on your needs and budget. If you’re short on time, you can also shop online to see your price immediately.

You can also visit our learning center to get answers to more of your frequently asked questions, such as what to expect with a rebuilt engine, whether or not buying a totaled car is a good idea, and more.