When scanning through ads for used cars, it is not uncommon to spot a few amazing deals that come with a small caveat: “salvage title.” What is a salvage title, how will it affect you as a buyer, and what rights and guarantees will you have if you decide to purchase such a vehicle?
What is a Salvage Title
Simply put, a salvage title is given to a car that has been deemed a total loss by an insurance carrier. In other words, an insurance company received a report that the vehicle had been damaged, lost, or stolen, and in response the company decided it was cheaper just to pay the total insurable value of the vehicle rather than try to repair it or find it. The owner then gave the vehicle to the insurance company (or it was later found and returned to the insurance company by the authorities) who sold it at auction to recover what value they could (usually either for the value of the scrap metal or the usable parts). Someone bought the vehicle, and has either opted to make the repairs to get it back on the road or is trying to sell it to you to make those repairs yourself.
Thus, unlike a usual car title, a salvage title puts the buyer on notice that the vehicle was at one time deemed beyond repair (or at least, that repairing the vehicle would have cost the insurance company more than it was worth). While salvage title also sometimes applies to stolen vehicles, the vast majority of cars, trucks, SUVs, and motorcycles with this title are ones that were damaged in an accident, flood, or other disaster. As a result, the resale value of these vehicles tends to be very low, making it possible to find what appears to be a too-good-to-be-true type of deal on a late model vehicle. Unfortunately, because it is a salvage title vehicle, the deal is a bit too good to be true, and buyers should be cautious.
Types of Salvage Title
The salvage title status varies a bit from one state to another. Some states have different types of salvage titles to help buyer understand just what they may be getting themselves into when buying the vehicle. For example, some states will identify the type of damage the vehicle suffered (e.g., Salvage Flood Title). This helps buyers know that while a vehicle may appear sound from the outside, the reason for its salvage title may be harder to detect.
Only a handful of states use salvage titles to identify recovered stolen vehicles. These states include Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma, and Oregon. If the vehicles is not from one of these states, then the reason for the salvage title is damage, not theft.
Some states also issue rebuilt titles. These are just vehicles that went through the salvage process and have been inspected and approved by a state official to return to operation on the road. Rebuilt vehicles may also incorporate components from a number of donor cars, and this designation alerts authorities to that fact. In newer vehicles, different components of a vehicle bear a vehicle identification number (VIN) in order to help prevent theft and sale of stolen parts. A rebuilt title lets people know that non-matching VIN numbers may be found on different components so the vehicle and its owner are not reported to the authorities. States that issue rebuilt titles may not allow salvage vehicles that have not been certified as rebuilt to operate on the roads.
Warranties and Insurance
Because a vehicle has a salvage title, it is not likely to carry any sort of warranty from either the manufacturer or the seller. A seller can give a warranty if it so chooses, but is under no obligation to do so under the law. Similarly, lemon laws and other consumer protection laws generally will not apply to salvage title vehicles that are clearly identified as such absent some sort of fraud or illegal coercion. Thus, what one buys when they purchase a salvage title vehicle is simply the vehicle itself with no guarantees about its usability, reliability, or usefulness.
Similarly, insurance can sometimes be difficult to obtain for a salvage title vehicle. If an insurance company is even willing to provide coverage, it will usually require a thorough inspection of the vehicle to ensure that it is in good working order and fully repaired and roadworthy. This may go even further than the process for obtaining a rebuilt title in states that issue these. Check with your insurance company to determine the exact requirements before buying.
Legal Considerations
Given all of the extra headaches salvage titles can cause, it is not surprising that disputes sometimes arise when these vehicles are bought and sold. It is not unheard of for someone to lie about the status of a vehicle's title in order to make a sale, and that could require an attorney's assistance to sort out the dispute. Similarly, attorneys may be necessary to help one navigate the process of getting a salvage title vehicle certified as roadworthy once again. Thus, it may be wise to speak with a lawyer before purchasing a salvage title vehicle in order to ensure that you know what you are getting yourself into and that everything is handled correctly so you can use the vehicle for its intended purpose. To find an attorney in your area, visit HG.org's lawyer search service.
