As you shop for a used car, you might come across the phrase “salvage title” in a used car advertisement. The price is going to seem right and you’re really going to want to buy it. Just make sure you act with your brain and not your heart. There are a lot of things to consider before you can understand used car salvage titles.
I’m not here to say used car salvage titles are automatically a bad idea, but make sure you know what you’re getting into before purchasing a used car with a salvage title.
Here are four things you absolutely have to do before even considering buying a vehicle with a salvage title:
- Understand What a Salvage Title Is
- Get a CarFax report
- Get a Qualified Inspection
- Weigh the savings vs. future costs
Understand What a Salvage Title Is
In almost all cases, salvage title is given to any vehicle that has sustained damage worth 75% or more of its value. For example, if you drive a 2002 Honda Civic worth $9415 and it suffers $7061 in damage in a collision, it’s going to be branded with a title stamped “salvage.” In other words, it’s not considered fit to drive. Some states also call this a junk title.
According to carfax.com, the following 11 states also use salvage titles to identify stolen vehicles: Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma, and Oregon.
As mentioned, requirements are going to vary by state. In Florida, a car has to be damaged to 80% of its value before the accident. Vehicles in Minnesota are considered salvaged when they are declared "repairable total loss" by an insurance company, were worth at least $5,000 before the damage or are less than six years old.
A $4,000 car cannot be deemed salvage in Minnesota, which is a bad thing. Buyer beware when buying older cars from this state (or states with similar requirements). It makes poorer people more susceptible to unsafe vehicles.
The Arizona Motor Vehicle Division sums it up well with this statement: “Needless to say, there is risk involved in buying a restored salvage vehicle. While many of the parts may be new, there will be some that are not, and even trained mechanics cannot always gauge the life expectancy of a vehicle. Further, the vehicle will be difficult to resell if you ever choose to, and very few, if any, dealers will take it as a trade-in.”
By the way, it’s considered fraud to sell a vehicle without disclosing that it once had a salvage or junk title. That’s why titles will be branded “resalvaged” or something similar to denote a vehicle that has been repaired from a salvage title.
Here’s an important tip when dealing with a resalvaged title. Make the seller demonstrate what work has been done. In most states, receipts for parts and repair work have to be submitted in order to get the resalvage title. You just can’t walk into the motor vehicles department and get the new title without proof.
Get a CarFax Report
Typically, CarFax reports aren’t the be all and end all, but I think you’ll find them useful when dealing with vehicles with salvage titles. They provide a great deal of information about a vehicle’s history if you know what you’re looking for.
The details section of the report is going to focus on two important areas:
- frame damage check
- airbag deployment check.
Frame Damage Check: Cars with salvage titles have major problems. This is a warning that absolutely needs to be checked out. Your best bet is going to be an auto body repair facility. These mechanics have the best expertise for checking frame damage.
It’s important to have the frame check because it’s the basic skeleton of your car. Metal that has been straightened after a collision is permanently fatigued. That could lead to future weaknesses or problems. It’s just like a broken leg that has been set. That bone is going to give you trouble somewhere down the road.
Airbag Deployment Check: This is extremely important – not just because it indicates the car was in an accident and needs further inspection. You need to have your mechanic make sure the airbag was replaced. Unscrupulous body shops may not do the work.
Get a Qualified Inspection
As mentioned above with CarFax reports, you need to get a qualified inspection of any car with a salvage title. Actually, you’re going to need two: frame and mechanical.
Frame Inspection: The most important inspection is going to be the frame. Find an auto body shop with certified technicians to do this work. It’s worth the cost. These men and women have the most experience in fixing frame problems. They’re going to know the true condition of the used car’s frame.
Some folks recommend going to three auto body shops. I’m neutral on that idea because it is a major time investment and financial investment. I’d recommend three inspections on a vehicle worth more than $50,000. On less expensive vehicles, you begin to eat up your savings from buying a salvage-title vehicle.
Mechanical Inspection: This should be done for every used car regardless of its title. This will spot any potential long-term or short-term operating problems. The existence of a problem isn’t an automatic deal breaker. It’s just another factor in determining the vehicle’s value.
Weigh the Savings vs. Future Costs
Is it worth it to you to save $2000 on a car, if it’s going to cost you $3000 down the road in repairs? It might be if you’re capable of performing the repairs.
Also, are the savings worth it if you’re going to have trouble selling this car down the road? You may have difficulty finding savvy buyers who know salvage titles or resalvage titles aren’t always a deal killer.
The savings could also be worth it if you plan to run this car into the ground. If you’ve saved a good deal of money, you can always junk the vehicle when the time comes instead of repairing it.
A Good Link for More Information
At this site, www.dmv.org (which sounds official, but isn’t) complete information is available from each state on its salvage title laws. It’s a handy resource for understanding what to do with a salvage title. Each state is different.