Cars with salvage titles are often priced well below market value, which attracts buyers. Though this may seem like a great bargain, there are plenty of associated risks when purchasing a salvage vehicle.
Some buyers may find these cars appealing, but for most, they are better avoided. A few common challenges that come with owning a salvage car is that they are more difficult to insure — the car must be repaired and given a rebuilt title before it can be insured — finance, and resell.
Salvage titles: what are they?
The salvage title is given to a vehicle when an insurance company declares it a total loss, warning future buyers that the vehicle was in poor condition.
An automobile is considered a total loss when it is so severely damaged that it does not make financial sense to repair it. A car’s pre-crash value generally ranges from 60% to 100% of its repair costs. There may be other formulas that insurers use that differ from these percentages.
Cars can get a salvage title for many reasons, including:
- Damage caused by water, floods, fires, or hail.
- After a claim was paid, a stolen vehicle was recovered.
Salvage title vs. rebuilt title
Cars with salvage titles can’t be legally driven on the road. Is there a reason why anyone would buy one?
Rebuilt titles are issued when salvage-titled cars have been repaired and passed a safety inspection.
It is then possible to insure and drive these vehicles. There is sometimes confusion between a rebuilt title and a salvage title because a rebuilt title indicates a car has had a salvage history.
The conventional wisdom on car buying recommends avoiding used cars with salvage histories, especially if you don’t know anything about cars, as it may be safer to stick with those that have a clean title —that means they have never been declared total losses.
Why buy a car with salvage history?
The prices of these vehicles are significantly below the market value. Typically they cost 20% to 40% less, according to SCA car auction. So, you can get a great deal on them. To find out the market value of a vehicle, get a private appraisal based on its salvage history.
Find a diamond in the rough
Salvage-title cars are sometimes sold at low prices even though they are only slightly damaged. In a hailstorm, the body might be damaged, but the engine and interior will be untouched. Despite the fact that older vehicles require only small repairs, they might be declared totaled due to their loss of market value. In some cases, cars with salvage titles may have never been in an accident before they were recovered after being stolen.
A source for parts
It is common for people to buy salvage-title cars to use as a “donor car” for parts. Many salvage-title car owners enjoy fixing them up themselves. Consider the cost of getting a rebuilt title, such as the inspection fee, when you buy a fixer upper and plan to drive it.
What kind of person should buy a salvage-title vehicle?
As a result, the pool of ideal buyers for a car with salvage history is small. Buyers include those who:
- Can inspect and possibly repair a car with sufficient mechanical knowledge.
- Have a thorough understanding of the seller and the reason for the salvage title.
- Keep the car long enough to depreciate fully, eliminating the need to resell it.
- May need a second car that is rarely used, like for a vacation home.
- Want to drive more cars for less money, and have the cash to do it. These cars cannot be financed.
The North American auto auction market is led by SCA Auctions. It has an impressive selection and excellent customer service, and it is generally considered to be of high quality. They hold regular onlinw auctions, so you’ll never miss the opportunity to buy your dream car.
Registration with them is easy. This will simplify the process of searching for and bidding on cars. It is easy to narrow down the car you want by using their user-friendly website. A vehicle that meets your needs can be found at SCA Auctions.
We hope you found this blog post on: Is it Worth Buying a Car that has a Salvage Title?, useful.
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