If a car has a salvage title, you may be better off steering clear. Salvage-title cars attract some buyers because they're often priced well below market rate. But even though they may seem like a bargain, they come with a lot of risks.
Salvage-title cars can be great opportunities for a specific type of buyer, but even then, it's best to proceed with caution. These cars may be repaired haphazardly, making them harder to insure, finance and resell.
What is a salvage title?
A vehicle receives a salvage title when an insurance company declares it a total loss. That title warns future buyers that the car had a significant problem.
A vehicle is typically marked a total loss when it's damaged so severely that repairing it doesn’t make financial sense. Generally, this happens when repairs would cost 60% to 100% of the car’s pre-crash value, depending on the state. (Insurers may use their own total loss formula that differs from these percentages.)
Cars can get a salvage title for many reasons, including:
An accident.
Water or flood damage, smoke damage from a fire, or hail damage.
A theft where the car was recovered after the claim was paid.
Salvage title vs. rebuilt title
If a car has a salvage title, you can’t legally drive it on the road (except to a repair or inspection site). So why would anyone want to buy one?
If a salvage-title car is repaired and passes a safety and anti-theft inspection, its title can be revived. These revived titles, also known as reconstructed or rebuilt titles, allow the vehicle to be insured and legally driven again.
Because a rebuilt title indicates the car has salvage history, sometimes people say "salvage title" to refer to cars with a rebuilt title.
Regardless, buying a used car with salvage history can be risky. It's probably safer to stick to cars with a clean title, meaning the car has never been declared a total loss.
Why shouldn’t I buy a car with salvage history?
Safety concerns
For most people, the biggest issue with buying a car with salvage history is safety. You might not know the extent of the damage that caused it to be declared a total loss, and if it has a rebuilt title, the repair work could have been done improperly.
Be wary of water- or flood-damaged vehicles, as well. It can take months or years for problems to manifest.
Potential fraud
Someone selling a car with a rebuilt title can say the original damage was minor and cosmetic, but that information can be hard to verify, even if they show you documentation that repairs were made. And if the car turns out to be in poor condition, you’ll have little to no recourse.
Most privately sold and many dealer-sold used cars are sold "as is," meaning you understand there could be known and unknown issues. You could sue the seller, but in most states, you would have to prove that you were deliberately misled. That can be extremely difficult, especially if the seller disclosed the salvage title.
Difficult to insure or finance
Most car insurance companies offer only limited coverage for rebuilt-title cars — or refuse to cover them at all. Banks also look at cars with salvage history as a risk and rarely provide financing for them.
Hard to resell
It can be difficult to find a dealership that will accept a vehicle with salvage history as a trade-in. Those that do will likely offer you significantly less compared to the same model with a clean title. Private sales can be just as difficult.
Cars with salvage or rebuilt titles can’t be valued accurately by online pricing guides such as Edmunds or Kelley Blue Book, making it hard to convince buyers of a reasonable price.
Why would I buy a car with salvage history?
Lower cost
These vehicles are priced significantly below market — typically 20% to 40% less, according to Kelley Blue Book — so it’s possible to find great deals. However, every vehicle’s salvage history is different, so make sure to get a private appraisal to determine the market value.
A diamond in the rough
Sometimes, a salvage-title car is only lightly damaged but still being sold for a low price. A hailstorm might damage the body but leave the engine and interior untouched. Older-model vehicles might have lost market value to the point that they're declared totaled, even if they only need small repairs.
Cars recovered after being stolen might receive a salvage title without ever having been in an accident.
A source for parts
Some people buy salvage-title cars to use as a "donor car" for parts. Others enjoy fixing up the salvage-title car themselves. If you buy a fixer-upper and plan to drive it, don’t forget to factor in any associated costs with getting a rebuilt title, such as the inspection fee.
Am I the right buyer for a salvage-title car?
Given the pros and cons of buying a car with salvage history, these cars are best suited for buyers who:
Have enough mechanical knowledge to inspect the car and identify necessary repairs.
Know the seller and exactly what caused the salvage title.
Plan to keep the car so long that it fully depreciates, making resale a non-issue.
Need a second car that's rarely used, perhaps for a vacation home.
Can’t get a loan and have to pay cash for a car.
How to buy a car with salvage history
If you're determined to buy a car with salvage history despite the risks, take these steps to ensure a safer purchase:
Tips for inspecting the car
Only buy from a reputable seller you trust: When dealing with salvage history, it’s especially risky to buy from online classified ads, private sellers you don’t know or dealers with questionable reputations. Check online reviews for any dealerships you’re considering purchasing from, and only work with private sellers you know well and trust.
Ask a mechanic you trust to perform a full vehicle inspection: Don’t rely on the current owner's description of the mechanical condition. Ask the inspector to look for frame damage that could alter the car's alignment.
Get a vehicle history report: It might have additional information about the incident that led to the salvage title. Avoid cars where the report shows it was towed from the scene or where the airbag was activated. Both indicate a more serious accident.
Learn as much as you can about the damage: Ask the seller for repair records and estimates or speak with an employee of the body shop that did the repairs. Request photos of the car showing the damage before it was repaired. If the car passed through a salvage auction, you may be able to find pictures by looking up the car’s vehicle identification number (VIN).
Take it for a test drive: Push every button and turn every knob. Take the car on the freeway to make sure it tracks straight. Find an empty road and hit the brakes hard.
Find out how long ago the rebuilt title was issued: If it was issued years ago and the car's been driven consistently since, the repairs may have been adequate (though that's not guaranteed). If the accident or damage occurred recently, there's greater uncertainty.
Tips for financing and insuring the car
Consider an unsecured personal loan: Paying upfront with cash can be daunting. You may qualify for an unsecured personal loan based on factors such as your credit history, credit score, income and debt-to-income ratio. Compare rates before applying.
Get a pre-purchase insurance quote: Find out how much you should expect to pay for insurance — and whether your insurance company will even insure the vehicle — before you agree to buy the car. In virtually all states, you will need at least liability insurance to legally drive the car.
