Salvage Titles 101: Your Top Questions Answered
When shopping for a used car, you hit the jackpot. You found a great model with an amazing price, low mileage, and a clean interior. Upon further examination, you realize it has a salvage title. If you’ve heard the term but don’t know what exactly it means, keep reading.
What is a Salvage Title?
After a bad accident, theft, or disaster, car insurance companies may deem a vehicle a total loss. Despite common misconceptions, totaled doesn’t mean a car cannot be repaired. It means the cost of repairs would be greater for the insurance company than the car is worth.
Individuals may elect to purchase a totaled vehicle from an insurance company. The damage will be documented on its title, which declares it salvaged. Once repairs are made, the car or truck may be roadworthy.
How Does a Salvage Title Effect Insurance?
Since an insurance company declared the vehicle totaled, you are probably wondering about future insurance. Does a salvage title cost more to insure? If you are able to secure coverage, you will be subjected to a higher premium. Maintaining only liability coverage is often your best or only option.
What are the Benefits of a Salvage Title?
For a savvy buyer, there are a few reasons to consider a vehicle with a salvage title. The most obvious appeal is the lower price tag. In some instances, the damage may not be that severe, and an experienced person can perform repairs more affordably than an auto shop. Even if the vehicle will never be roadworthy again, it may still contain valuable parts that can be used for other projects.
What are the Risks of a Salvage Title?
The benefits are countered with several risks. You may face higher repair costs than expected. Depending on why the car was salvaged, there may be extensive damage that you don’t see at the time of purchase. The vehicle’s history will also follow it for all of its useful life which will impact the resale value.
Can You Finance a Salvage Title?
Financing a salvaged vehicle is possible but difficult. Big-name lenders often choose to bypass the risk. However, a credit union or specialty lender may work with you. The loan process requires comprehensive paperwork showing an insurance policy, damage history, and completed repairs.
If the vehicle won’t qualify for a car loan, there’s still hope. Some buyers acquire funds from other types of loans. Options may include a personal loan or home equity line of credit.
Are There Tips for Salvage Titles?
A few tips will help you protect your interests when buying a vehicle with a salvage title. Make sure you ask why the car was totaled. Necessary repairs for flood damage, a fender bender, or a theft recovery will be different. Try to have a pre-buy inspection performed for an extensive record of the damage and estimated costs of repair.
With a reputable source, salvage titles can be a good investment. Just make sure to use your best judgment when considering the purchase.