clock November 27, 2018 comments No Comments flowchart Automobile InsuranceOur Blog tag Safety

a car with a salvage titleWhen you’re shopping for a car, the price of a vehicle with a salvage title may seem very attractive. However, there can be many reasons why the price is so low and why you shouldn’t base your decision on price alone.

What Is Salvage Title?

When a vehicle’s involved in an accident or experiences extensive damage the cost of repairs can exceed the value of the vehicle. Damage could include water damage that could later lead to mold issues, smoke damage, or serious structural, mechanical, or interior issues.

Insurance companies declare these vehicles a total loss, write them off and send them for scrap. The scrap yard may tear the vehicles apart and sell their parts, or sell the entire vehicle to someone who rebuilds it and sells it for a profit.

Safety Issues

Rebuilding involves piecing together parts from several vehicles in hopes of creating a fully functional vehicle. While some rebuilders are trustworthy and diligent, others ignore the severity of the damage done to the vehicles they combine in a rebuild.

Some rebuilders are only focused on profit. Consequently, they cut corners to save money and put drivers at risk. They may install faulty components or even fake the installation of important safety equipment such as air bags.

Buyer Beware

Some sellers claim insurance companies are too eager to declare a total loss and the damage was only minor or cosmetic. However, when you believe them and buy the rebuilt vehicle, there’s nothing you can do if the vehicle turns out to be a worthless piece of junk.

Salvage title means you buy the vehicle “as-is.” You won’t receive a warranty or guarantee and you have no legal recourse either. Additionally, most banks and finance companies won’t lend you money for a salvage title vehicle.

Once a Salvage, Always a Salvage

No matter how much money you put into your vehicle, it will always be a salvaged car. It might look great and run well, but it will always be worth much less than a comparable car with a clean title. Even if the initial low price seems like a bargain, it will never be a good investment.

Limited Resale Options

Dealerships aren’t likely to accept a salvage title as a trade-in and selling privately comes with its own set of problems. How do you convince someone the vehicle’s worthwhile when the buyer can’t assess its’ value, safety, or quality of the repairs?

They may buy your vehicle at a rock bottom price, but only if they have mechanical skills and can assess its’ condition.

Insurance Complications

When insurance companies see your vehicle has a salvage title they’ll either refuse to deal with it, or they may not offer collision and comprehensive. The deal breaker is that it is almost impossible to differentiate existing damage from new damage if you make a claim.

If they do offer collision and comprehensive, you may pay substantially more. If you can only buy liability coverage and you’re in a serious accident, your vehicle’s not covered.

It’s also difficult for insurers to assign value and risk to a rebuilt vehicle, so fewer carriers provide coverage and when they do they don’t pay out much for claims.

Considering all these factors, salvage title vehicles aren’t really good bargains. Your safety and investment are at risk and it can be very difficult to find insurance.

Buyers should always get a pre-inspection before they buy a used car. Some dealerships also offer Certified Pre-Owned vehicles with a manufacturer’s extended warranty, but steer away from salvage titles unless you’re a qualified mechanic.

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