Salvage Title Inspection07/17/2019
There are many confusing facts about buying, repairing, operating and insuring a vehicle with a salvaged title. So it's time to clear the air on just what is and is not true.
What is a salvaged title?
Like it or not, all 50 states cooperate with automobile insurance agencies, and have what is officially termed a "salvaged title?" If an insurance company determines an auto they were insuring has sustained damage that cost a significant percentage of the car (in most cases, 70 percent or more,) then the car is written off as salvaged by the states DMV, (department of motor vehicles, and the title of the car, no matter who it is sold to, is
now listed on the title as salvaged.
Are salvaged cars only those that were in an accident?
The answer to this is no. To protect the public from buying vehicles that may have sustained a lot of damage, most DMV departments also label vehicles that have been involved in a flood as salvaged. In addition, a vehicle may be declared salvaged by various states, if they experienced significant hail damage, or damage from theft and vandalism.
What happens after a car is labeled as salvaged?
First of all, you can't drive it. Get stopped by the Highway Patrol for any reason, and if while running your plates through their computer system they notice your vehicle has been declared salvage, unless you have done certain steps to clear the title, you are driving an illegal vehicle on the highway, and are subject in the courts to a huge fine.
Second, once a vehicle has been titled as salvaged, that designation stays with the vehicle for the rest of the life of the vehicle.
Let's say for example, you buy a one-year-old luxury Mercedes Benz with only 5,000 miles on it that has been declared salvage by the insurance company. Regardless of what repairs you put into your salvaged Mercedes, instantly, the manufactures warranty on your car ceases to be valid.
Second, good look getting insurance on your automobile. Even if you put $4,000 worth of repairs to bring it back to new, insurance for damaged cars is almost exclusively limited to liability insurance, the reason being that that the insurance company doesn't want to take the risk of paying out a claim for problems related to the previous accident.
Thirdly, you won't be able to obtain a bank loan to buy it. No bank or credit union will issue you a loan to buy a salvaged auto. If you fail to pay the loan off and they repossess it, they would be stuck with an auto that is too difficult to resell.
Finally, if you get tired of driving your salvaged auto and want to trade it in as part of a new car purchase, the auto dealership is highly unlikely to take your salvaged vehicle in on trade. The risks, if they resell it to someone else is just too much to risk tarnishing their reputation.
Can a salvaged car have new life?
Those caveats being the exception, it is possible for you, or your mechanic, to mechanically re-build a car to meet the requirements to drive it on the road.
Once your salvaged car has been rebuilt, you make an appointment with an officially licensed inspection facility in your state. An appointment is necessary, you can't simply drop by and have your car inspected, and since your auto hasn't been approved to drive on the road, you'll need to tow it in to the inspection facility.
If the inspection facility clears your auto and considers it driveable, you complete an application with your state DMV, along with the inspection paperwork. to have the salvaged title issued to you
In some states, after proper inspection, the title will now say salvaged repaired. Note that regardless of how your state works, you can't legally sell salvage title cars to anyone, including your close relatives, without a salvaged title from the state and without disclosing the reason the auto was considered salvaged.
So, what are the advantages of buying a salvaged car?
The distinct advantage of buying a salvaged auto is that they are decidedly cheaper.
Theoretically, since the damage level for an insurance company to declare an auto salvaged is 70 or 75 percent, you shouldn't reasonable expect to pay less than 25 or 30 percent of market value.
However, that amount is enough savings for many customers to consider buying an everyday salvage transportation car or truck, and the plain fact is, some insurance companies can be sloppy or lazy, and declare an auto as salvaged, even though it might be repairable for considerably less than the salvage repair rate.
Consequently, there is a huge market for buying salvaged autos, and if the right repairs are done, a savvy shopper can save a great deal of money.
If you are about to buy a salvaged auto, and you aren't repairing it yourself, be sure to become knowledgeable about the kind of accident the car was in.
For example, if what was damaged was mostly working parts, you may be alright, but if the auto has a bent frame, you are buying a potential headache. So be careful, and bring a friend who is a mechanic with you while looking at salvaged cars.