A salvage title is a different designation that a state applies to the vehicle when it has been previously damaged. The state requires the vehicle owner to allow the state Department of Motor Vehicles to add an official “salvage” disclaimer to the title of the vehicle. Buyers or others can look at the title, and see that the vehicle has been previously damaged.
A salvage title, also called a “junk title,” applies to a vehicle when it has been wrecked, or otherwise damaged beyond the cost of reasonable repair. Insurance companies often declare a vehicle as a “total-loss claim” where the costs of repairs exceed the market value of the vehicle. The insurance company weighs the pre-accident market value of the vehicle against the costs of repair. If the repairs cost more than the value of the car, it’s not in the insurance company’s interest to pay for the repairs. The company will declare the vehicle a loss and write a check for its value.
Because of the high market costs of fixing different kinds of auto damage, including cosmetic or body damage, it’s easy for a vehicle to be declared a total loss and yet still be a functional vehicle. When this happens, a salvage vehicle may be re-sold, providing the buyer is made aware of the salvage status. It can be difficult to get auto insurance for a car or other vehicle with a salvage title. Financing and other aspects of sale and use can also be problematic, which is why lots of auto experts advise against buying a salvage title vehicle.
Wrecks are not the only reason that a vehicle may carry a salvage title. Fire and flood can also result in damage to a vehicle that will make it a total loss to an insurance company. Buyers of salvage vehicles should do research to figure out exactly why the vehicle carries a salvage title. Nevertheless, for the right buyer, who may want the car for parts, or for driving on private property, a salvage car can be great deal.
Besides the extra steps involved in buying a salvage title vehicle, a state may have its own laws about registration for a previously damaged car or truck. Buyers are encouraged to consult their state Department of Motor Vehicles before getting involved in the sale of vehicles with salvage titles. Sellers should notify the buyer that a specific vehicle carries a salvage title, and explain some of the risks of buying this vehicle for personal transportation.
