If the new-car market’s increased prices and decreased inventory have turned you to the pre-owned market, you may be surprised by how expensive used cars are now, too.
Is there another alternative? A salvage title car certainly has monetary appeal, but what are you getting into with a vehicle that has been declared a total loss? We’ll point out some things to watch out for so you can make an informed decision. And we’ll address whether insurance costs more for a salvage vehicle.
Story Stages
What is a salvage title vehicle?
If an insurance company declares a vehicle a total loss, that vehicle will be branded with a salvage title. Often, the vehicle owner accepts the payment from the insurance company, and the insurer then sells the car for parts or to be rebuilt.
Sometimes, the vehicle owner repurchases the car from the insurance company for a reduced payout.
Sometimes a vehicle is repaired to working order and rebranded with a rebuilt title. Still, sometimes, depending on the person who did the repairs and the state laws regarding rebuilt titles, the salvage title remains.
The Risks of Buying a Salvage Vehicle
There has to be significant damage for an insurance company to decide to declare a vehicle a total loss rather than pay to repair it. And sometimes, the effects of the damage are insurmountable. Even if the car runs, you could have trouble with specific issues repeatedly because of the permanent damage.
Flood Damage
Salvage title vehicles with some types of damage could be worth buying for the savings, but it’s not worth buying a salvage title vehicle with flood damage.
Most of the time, if someone is trying to sell a vehicle that was totaled because of flood damage, they’ll try to hide that fact. The following are some of the types of damage to look for in a flooded car:
- Faulty electronics – Electricity and water are not a good combination, and the electrical components of a flood-damaged vehicle may be ruined.
- Foul odor – A flooded car can become quite stinky thanks to mildew, mold, and rotting organic material.
- Rust – When the car body and frame are soaked in water, the metal parts can start rusting, leading to structural and cosmetic damage.
Always get a vehicle history report. If the flood damage is listed, walk away from the deal. If it’s not listed and you suspect water damage, it’s not worth purchasing the vehicle.
Alignment Issues
A significant crash can cause the frame to be bent, which, even when repaired, is almost impossible to get completely even.
If you have alignment problems, your car won’t handle smoothly, especially at highway speed. As a result, you may have trouble maintaining control, putting you in a dangerous situation. Also, you will go through tires much more quickly than you should.
Electronic Connection
As mentioned early, flood damage can cause electronic damage, but so can the jarring associated with a significant impact. You might not discover the damage for a few months, but electrical problems are frustrating.
Insurance Costs
You might have a challenging time finding an insurance provider to cover a salvage-title vehicle. And if you do find one, they’ll probably charge higher rates than for a comparable car with a clean title. There’s more risk involved with insurance on a salvage title vehicle, so you’ll pay higher premiums.
Resale Value
There’s no way around the fact that you won’t get much when you decide to sell a vehicle you bought with a salvage title. But you didn’t pay much for it, so this issue shouldn’t come as a surprise.
The Benefits of Buying a Salvage Vehicle
There’s one benefit of buying a salvage vehicle, and it’s a big one: You’ll save a lot of money. In a competitive used vehicle market, you might only be able to afford a vehicle that costs far less than the competition. If you don’t want the risks of driving a 25-year-old vehicle around, you might be willing to purchase a newer salvage title vehicle.
Do the savings offset the risks? The answer depends on the type of damage and the quality of the repairs.
Cosmetic Damage
Sometimes vehicles are declared a total loss because of hail damage. Storm and hail damage isn’t pretty, but it rarely affects the driveability of a car. So if you’re willing to put your effort into looking classy in other areas besides a car, a cosmetically damaged salvage title vehicle might be a perfect fit for you.
Misunderstood Damage
You might be surprised to learn that sometimes, insurance companies don’t send adjusters to evaluate the damage and instead request owners to send detailed pictures. Sometimes the insurance companies make the wrong decision and declare a vehicle a total loss for minor damage.
For example, consider the following scenario: A parked vehicle is side-swiped, pushing the front end onto the curb. There are scratches on the driver’s side door, and the car is inoperable because the tie-rod is broken. The insurance company declares the car a total loss, and the owner buys the car back.
After spending $350 for repairs and replacing a broken rear-view mirror, the owner has a fully driveable car as reliable as before the damage occurred.
Reputable Repairs
An honest repair person will tell you the truth about the damage and the repairs and how they expect the vehicle to run. You could end up with a great vehicle that lasts for years with little problem.
Money-Saving Alternatives to Buying a Salvage Vehicle
If you don’t have enough money to buy the vehicle you want, you might want to consider making do with what you have and saving for another year. Your financial stability is essential, and sometimes the only way to achieve it is to make sacrifices.
You can purchase an older vehicle with higher mileage for less money than a newer model.
Rarely do you find a used vehicle listed for under market value. But if you’re always looking, you might be able to find one, so be vigilant in your search.
While some recommended never purchasing a salvage vehicle, it’s not something to write off entirely. You just need to be careful and gather as much information as you can to avoid problems down the road.
Melanie Musson writes and researches for the car insurance site, CarInsuranceComparison.com. She’s passionate about vehicles and helping people protect them with the best-fitting insurance policy.
