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If you’re in the market for a used car, you may have seen the phrase “salvage title” in some listings. These are typically the most affordable options–but they could be trouble. So, what is a salvage title, and should you buy a salvage title vehicle? What should you do if your car has one but you didn’t know? We’ve got answers.
Safeguard yourself from “lemons” by spotting the telltale signs of bad salvage title vehicles before you buy. Or, in the case that you’ve already made the purchase, know your rights and how best to recover from your state’s lemon laws.
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What Is A Salvage Title?
A salvage title is given to a car that has been seriously damaged in an accident, flood, or other catastrophic event where the cost to repair it is greater or nearly greater than its current value. Unlike a clean title, a salvage title can be given after a total-loss accident where the insurance company determines that the worth of the car is less than the extensive damage to it.
What Is A Salvage Title By State?
Salvage title laws vary by state. For example, in New York, a salvage title is required when:
- An insurance company obtains the vehicle after paying for a total loss claim
- A car’s damage is greater than 75% its current market value and the owner is self-insured
- A car has a salvage title from out of state
What Is A Salvage Title Car By Appearance?
Most states require that a salvage title be indicated clearly on the title of the car itself; always ask to inspect the title before purchasing. Also, most state laws require that a salvage title be disclosed by the seller to potential buyers.
Besides always obtaining a vehicle history report and taking the car to a trusted mechanic, you should look for warning signs that a car is basically a rebuilt lemon. Those include:
- The car’s paint quickly chips off or is a mismatch from the rest of the vehicle; this could be a sign that the car was in an accident and was given a cheap repaint job
- A Certified Automobile Parts Association (CAPA) sticker on vehicle parts could be an indication of prior damage
- Car parts are misaligned, such as the door, wheels, hood, or frame
- Flickering electronics could be an indication of prior flooding
Pros And Cons Of A Salvage Title
Depending on the buyer’s intent and the condition of the car, there can be many pros or cons to purchasing a salvage title vehicle.
- Reduced sale price
- Vehicle can be sold for parts
- Might find one with limited damage
- Might overlook the total damage to the vehicle
- Expensive repairs
- Difficulty in obtaining insurance
A Salvage Title Might Be Forever
A salvage title, or the DMV’s “document of doom,” may never be completely erased from the title’s history. Although the car may be rebuilt and roadworthy again after inspection and approval by the DMV, the salvage status of the vehicle will likely remain on the car’s title. This history is carried forward, and it will be compared to other, cleaner vehicles.
Should I Buy A Salvage Car Title?
Due Diligence Is Needed When Buying A Salvage Title Car
It is essential that you do your due diligence to best determine the status of the vehicle before buying a salvage car. You will want to:
- Verify the original repairs. Ask the original salvage title insurance company to provide a listing of all the work done to the vehicle.
- Look into alternative auto financing options. Because obtaining good financing isn’t easy, determine whether you could benefit from a personal loan or a home equity line of credit to secure your purchase.
- Review your state’s lemon law purchase options. According to most states, the seller is required to repair deficiencies in the vehicle at no cost to the buyer for a duration of time after purchase or offer a complete reimbursement. Many states allow for legal remedies in the case of absolute disrepair.
Some car sellers might engage in “title washing,” where they relocate the vehicle to a less regulated state like New Jersey or New York so they can more easily sell it.
Car history tracking products, such as Experian’s AutoCheck Vehicle History Tracking Report, produces car reports for $24.99 per vehicle. You can also conduct a VINCheck service with the National Insurance Crime Bureau (NICB) free of charge.
Financing, Insurance, And Resale
- Financing. Securing a bank loan for a salvaged title car has obstacles. The inherent structural or mechanical issues may make bankers hesitant to invest in a salvage title car. A personal loan might be the better route to take, as banks and credit unions want to know that the vehicle can last the term of the loan.
- Insurance. Because you are seeking to insure a salvage title car rather than a cleaner car, your insurance premium will be higher because of the greater risk associated with the car. Such cars could be a claim waiting to happen.
- Resale. Franchise dealers will not accept salvage title cars on their lot, so the options for resale or trade-ins grow slim. Remember to disclose the fact that the vehicle has a salvage title and possibly pursue a sale in the private market or an independent dealership.
Buyer Beware: What To Do If I Unknowingly Buy A Salvage Title Car
If you find you have bought a lemon, know you have rights. Consider pursuing recourse with these steps:
- Notify your state’s consumer protection office. You will receive valuable information from your local office that can better put you on the road to a refund.
- Obtain legal help. Reach out to the National Association of Consumer Advocates for a local attorney to see what the best solution is for you.
- Begin a Paper Trail. Consult your buyer’s guide that your used auto dealer gave you to establish the facts of your fraudulence case.
Needing Expert Help To Better Determine Whether Your Car Is A Lemon? Consult A Professional Today
If you need professional help with the challenges a salvage title vehicle might present, and whether it’s actually worth the risk, speak with an expert today. If you’re still asking, “What is a salvage car title?” let a professional help you get the answers you need.
Legal Disclaimer: This article contains general legal information but does not constitute professional legal advice for your particular situation and should not be interpreted as creating an attorney-client relationship. If you have legal questions, you should seek the advice of an attorney licensed in your jurisdiction.