What Are Salvage Titles?

A vehicle receives a salvage title when it’s damaged in an accident so severe that it is deemed a total loss. Nebraska state laws say this occurs when the car’s repairs would cost 75% of its pre-crash value. Before putting the totaled car back on the market, the insurance company takes ownership, issues a salvage title, and sells it to a repair facility.

Why You Shouldn’t Buy A Salvage Title Car

Salvage title cars seem attractive to some buyers because they’re priced significantly below market value. They might seem like a bargain, but ultimately they have a variety of risks. We understand it looks like a good deal, but we recommend going the safer route by buying a cheap used vehicle from a reputable dealer. Salvage title cars might represent opportunities for a select group of buyers, but the majority of buyers should avoid them altogether. Here’s everything you need to know.

There are many drawbacks to buying a salvage title car. The biggest is not knowing the extent of the damage that caused the vehicle to be declared a total loss. Make sure to consider these other factors:

Safety and Fraud, Unfortunately, you don’t know how the car was repaired after the accident. There have been reports of salvage car rebuilders using cutting corners to save money and maximize their profits. These cut corners could be to the safety systems. Salvage title also implies an as-is sale. There are no warranties or guarantees on the condition of the vehicle.

Difficulty insuring and financing: Many car insurance companies will only offer limited coverage for salvage title cars, or they may even refuse to cover them at all! This occurs because it is so difficult to assign an accurate value to a salvaged vehicle. Finding financing can also prove to be a tough task when looking at salvaged cars. Banks view salvage title vehicles as a risk and rarely provide funding for them.

Limited to no resale value: Dealerships rarely accept salvage vehicles as trade-ins because of the difficulty assigning a salvage title vehicle an accurate value, this makes it hard to convince buyers the used car is priced at a reasonable price.

If you’re determined to buy a salvage title car despite the risks, follow these steps to have the safest purchase possible.

1. Ask a mechanic you trust to perform a full inspection, don’t rely on the current owner’s description of the condition of the vehicle.
2. Get the Carfax! There may have been more damage to the vehicle. It may also have additional information about the accident that caused the salvage title.
3. Learn as much as you can about the damage to the vehicle. Make sure to ask the seller for repair records and estimates. Make sure to speak with an employee of the body shop that worked on the repairs of the vehicle.
4. Consider using an unsecured personal loan to purchase the vehicle. Paying upfront with cash can be scary, but you may be able to qualify for an unsecured personal loan based on payment history and credit score.