Why Is Buying a Car with a Salvage Title a Good Idea?

February 28, 2013

There's a big debate over the merits of buying a car with a salvage title. Critics of salvage title sales point out that buyers can't always know for sure how bad the previous damage was. They also point to problems with insurance, financing and low value issues. However, there are some who like to try their luck with a salvage title sale. Here are some reasons why some defy the warnings and try for a deal with a car or truck with a salvage title.

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Low Cost
The main reason for the popularity of salvage title car sales is the price tag. Buyers can find cars much cheaper when they hold a salvage title. Now, a lot of the problems with salvage title cars also come from their reduced value. Blue book sites won't value them, and often, nobody knows just exactly what they are worth. That's why sellers will often part with them for pennies on the dollar. Since the advent of eBay car sales, where buyers and sellers meet online, even more salvage title vehicles are getting thrown into the mix at reduced prices.

The Right Insurance
Inexperienced buyers of salvage title vehicles often report problems with their insurers. Some insurers won't cover salvage title cars at all. Others will jack up the price of coverage due to "unknowns." Still others will charge normal premiums, but pay out almost nothing in the event of a claim.

However, some buyers use the idea of salvage title value to their favor. They call up insurance representatives and shop around for an insurer who will match the reduced value to lower premiums. That way, they got their car cheap, and they keep it on the road cheap, with a low liability premium based on the reduced value of the car.

No Resale
Drivers who want to benefit from a salvage title sale often forget about reselling the salvage title vehicle. They will drive this car for the rest of its useful life. Here's the basic idea: any used car is only as good as its functionality or getting you from point A to point B. If a salvage vehicle does that for x number of years, the driver has saved money.

Two Car Strategy
Another way that drivers profit from owning a salvage title vehicle (insured in the above fashion) is with a two-car strategy. The household buys a really nice new vehicle for combined trips, family trips and some kinds of long distance travel. They can also take out pay-as-you-drive insurance to keep premium costs down. Then, they use the salvage title vehicle for commuting (at the negotiated insurance rates). The use of the salvage title vehicle keeps mileage down on the new vehicle, so that, at the time of resale, the odometer reads low.

5 Steps for Buying a Salvage Title

Purchasing a salvage title vehicle is a little different than buying a normal used car. There are steps that you have to take to ensure that you can have the vehicle registered in your name as well as be able to purchase insurance for the vehicle.

Find and Buy a Salvage Title Car
First, you need to find a salvage title vehicle to purchase. You can find salvage title vehicles through a variety of sources. You can find salvage title cars on the Internet by searching for salvage title vehicles with your favorite search engine. Furthermore, many salvage title vehicles are made available for sale at local auctions. Check your newspaper classified ads for auctions coming soon to your area. In addition, check your yellow page directory for junk dealers, salvage dealers and towing services, as these types of businesses often have salvage title vehicles. Once you find the vehicle, negotiate the selling price and get a salvage title vehicle from the seller.

Take Photos of the Vehicle
You need to take photos of the vehicle before and after the repair process. These photos will be helpful to you when you have the car inspected for being roadworthy and to be re-titled. These photos will also help you show the inspector where the damage was so that he will be able to better focus his inspection on the damaged areas. The more photos you take of the vehicle the better. It will reduce the documentation required to describe the damages that were repaired and the parts that were replaced.

Keep Your Receipts and Documentation
Most states have restrictions on what types of used parts can be used in repairing a salvage title vehicle. Furthermore, many states require that some parts be brand-new. Research the restrictions in your state and make sure that you have ample receipts and documentation to prove what types of parts were used during the repair of the vehicle.

Get a Car Inspection
After you've completed all of the repairs to the vehicle, you need to take the vehicle to a certified inspection agency. Check with your state Department of Motor Vehicles to find out where certified inspection agencies are located. The car will be inspected for overall road worthiness and be checked to ensure that it meets your state's required safety and emissions standards. You should take all your receipts, photos and documentation to show the inspector what was used in the repair of the car.

Register the Vehicle Title in Your Name
Once your vehicle passes the safety inspection, take the proof of inspection and the rebuilt title to your state Department of Motor Vehicles. Complete the application form and submit your inspection report. You will be required to pay the fees assessed by your state for transferring the title. The title transfer application will still need to be approved, and may take several weeks before the process is completed. However, once the transfer is approved the Department of Motor Vehicles will send you the title in the mail.

Precautions to Take When Buying a Salvage Title

Although some buyers can get good up front prices when they buy salvage title vehicles, it is often a dangerous proposition. Here are some of the main reasons buyers have to be careful when trying to get a deal on a salvage title car or truck.

  • Financing.Many lenders will be wary of loaning money for a salvage title vehicle because of its dubious value and history
  • Hidden damage. The generic aspect of a salvage title and vague state requirements can make it tough to know what is truly in a vehicle's history. CARFAXchecks and similar research only provides part of the story. Always conduct a thorough visual inspection to try to spot flood or fire damage
  • Lack of coverage.Some drivers wanting to purchase salvaged vehicle titles find that their common insurers will not cover these vehicles, or will only cover them at very high rates. Again, this has to do with problems regarding accurate values for a salvage title car or truck
  • Insurance claims.Another problem with ensuring salvage title vehicles is that an insurance company may not pay much in the event of a claim, contending that because of its salvage title status, the vehicle is not worth much on the market
  • Subpar repair. Another issue with salvage title vehicles is that the buyer may not be able to tell how the vehicle has been refurbished. All car parts are not equal, and using cheap parts creates a lower value vehicle and a greater chance for problems on the road
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