What Is a Salvage Title?

Woman looking in window of SUV for sale
If you come across a car with a salvage title, be sure to do your research on the vehicle and the seller before you purchase it.
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Visit an online classifieds Web site, and you'll find a fleet of them: cars, trucks and motorcycles of all types, with outrageously low asking prices and long descriptions of the vehicles' excellent condition and luxury features. But mixed into the glowing descriptions of vehicle histories are two words that can quickly throw a complicating wrench into your dreams of finding the auto deal of the century: "salvage title."

What does it mean when a car has a salvage title? Can the car be driven on the street? Is it even safe to drive a salvage-titled vehicle? Depending on the situation and your state's laws, a salvage title can mean a number of things: It could add time and expense to the licensing and registration process. It could kill the deal outright, leaving you searching for another car to buy. But in some cases, it could present a deal -- if you have the knowledge and mechanical know-how to take advantage of it.

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So what is a salvage title? State motor vehicle bureaus issue titles of ownership for a number of reasons. Titles help identify who owns a car, thus helping law enforcement identify stolen vehicles. Titles also help states keep track of how many and what types of vehicles are on their roads. For a car buyer, a title history can outline the life of a used car or truck, including significant accidents and transfers in ownership. The title can play a key role in helping the buyer determine if a car is as good a deal as advertised.

States will issue special types of titles when certain events occur. A state typically issues a salvage title when an authority -- usually the car's insurer -- declares the car to be a total loss: An accident, theft or other damaging incident has rendered the vehicle more expensive to repair than to replace. By changing the title, the insurer is able to write off the vehicle as a loss -- it ceases to exist from the insurer's standpoint [source: Carfax].

The salvage title can put limits on the vehicle that receives it. It may require that the car be inspected before receiving a road-legal rebuilt title, or it could restrict the car to only being used for parts and scrap. And some states restrict who can purchase a salvage vehicle, limiting sale to state-licensed rebuilders [source: QuinStreet Insurance Agency Inc.].

Many of these restrictions have a common goal: safety on the road. Since an insurer has classified a vehicle as not worth repairing, the reasoning goes, that vehicle needs to be reviewed with extra scrutiny before it's put back on the road. More on that next.

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Getting Back on the Road

If you've come across a salvage-titled car you want to buy, and your state allows you to purchase it, a careful mix of research, scrutiny and understanding of title processes can mean the difference between your purchase being a deal or a non-roadworthy money pit.

First, you must know why the car received a salvage title. If it was stolen and recovered, for example, the insurer may have already replaced it for the owner and written off the recovered car as a matter of accounting. On the other hand, a car that receives a salvage title because its frame was bent in a crash could be a nightmare to repair and may never be safe to drive. Likewise, some damage, such as flood damage, is hard to spot. A car that looks and smells fine on a sunny day may be a different story when the weather turns damp [sources: Lease Guide, Salvage Title Cars].

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Once you've identified the cause of the salvage title, consider your own skills and resources. Do you know how to repair the damage that keeps the car from being roadworthy? Do you have the time and money to pay for the additional inspection needed to have the car retitled, and will your insurer charge a higher rate to cover the car because of its history? If you enjoy working on cars and have access to the proper tools and parts, you may be able to complete repairs yourself and make the car roadworthy for far less than a mechanic would charge. On the other hand, biting off more than you can chew can leave you with an expensive project that does little more than take up space in your garage.

Once a salvage-titled car is ready to go back on the road, it typically must be inspected. State motor vehicle bureaus or highway patrol departments usually handle this process, and there is usually a fee for the inspection, in addition to any fees for the new title. The inspection ensures that the vehicle is roadworthy and often includes a check of the major components (motor, body parts, etc.) to guarantee that no stolen parts were used in the reconstruction. It's important to learn about the inspection process in advance in case you need to supply proof of ownership -- typically in the form of receipts or bills of sale -- for any components used to repair the car [sources: Ohio Department of Public Safety, Connecticut Department of Motor Vehicles].

In the end, a buyer is wise to heed an old phrase that's been around since long before cars, titles and salvage even existed: "Buyer beware."

For more great information, check out the links on the next page.

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Salvage Title FAQ

Is it worth buying a car with a salvage title?
There are pros and cons to purchasing a car with a salvage title. You may be able to get a great deal and a very low price for a salvage vehicle. However, you'll have to put quite a bit of money into the vehicle for repairs so it's safe to drive.
Will insurance cover a salvage title?
Most insurance companies will provide some kind of insurance for salvage vehicles — but you'll need to clear the salvage title and have the car inspected by your state to ensure it's safe to drive. Typically, insurers will offer liability insurance on salvage vehicles. Some may also offer collision insurance.
Do dealerships sell salvage title cars?
Many auto dealership can't sell salvage title cars because of the liability involved. You'll instead find salvage vehicles sold primarily at auctions or by individual owners.
Can I get full coverage on a car with a salvage title?
No, you typically cannot get full auto insurance coverage on a vehicle with a salvage title.
What is the downside of buying a car with a salvage title?
The extensive repairs needed to make a salvage title vehicle safe and suitable to drive are the biggest disadvantages. You can spend thousands of dollars on repairs just to make the car drivable.

Lots More Information

Related Articles

  • Carfax. "Glossary of Terms." (May 17, 2011)http://www.carfax.com/definitions/glossary.cfm
  • Connecticut Department of Motor Vehicles. "Salvaged (Totaled) Vehicles." April 7, 2011. (May 17, 2011)http://www.ct.gov/dmv/cwp/view.asp?a=804&q=244912
  • Lease Guide. "Damaged Cars, Flood Cars, and Salvage Cars Make Cheap Cars." (May 17, 2011)http://www.leaseguide.com/articles/damagedcars.htm
  • Neff, John. "Infographic: One car stolen every 33 seconds … and other fun grand theft auto facts." AutoBlog.com. April 28, 2010. (May 20, 2011)http://www.autoblog.com/2010/04/28/infographic-one-car-stolen-every-33-seconds-and-other-fun-gr/
  • Ohio Department of Public Safety. "Salvage & Self-Assembled Vehicle Inspections." (May 17, 2011)http://bmv.ohio.gov/salvage_inspection.stm
  • Paintless Auto Repair Specialists. "Insurance Industry Trends: Fewer vehicles are totaling." (May 20, 2011)http://parscertified.com/blog/2011/05/insurance-industry-trends-fewer-vehicles-are-totaling/
  • QuinStreet Insurance Agency Inc. "What is a rebuilt title or a salvage title?" (May 17, 2011)http://www.carinsurance.com/kb/content26568.aspx
  • Salvage Title Cars. "Theft Recovery." (May 17, 2011)http://www.salvagetitlecars.net/3.html
  • Texas DMV. "How to Register a Custom or Antique Vehicle in Texas." April 28, 2011. (May 20, 2011)http://www.dmv.com/tx/texas/custom-vehicle-registration
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