If you’re in the market to buy or sell a car or you were in an accident and you’re dealing with terms like total loss, you’ve likely heard something about a salvaged title. But what is a salvage title?
A car’s title identifies its legal owner and includes important information like lien holders and histories of significant damage. If a car has sustained major damage, the state requires it to carry a salvage title to serve as a warning to potential owners, insurance companies and lenders that the car may not be reliable or safe.
Every state has its own formula for calculating when a car must be deemed a total loss or salvage vehicle, but it’s generally a question of whether the repair costs are too high compared to the car’s actual cash value. The following article expands on the salvage title definition and includes helpful information about how this type of title can affect you.
[READ: How to Report a Traffic Accident to the Police]
What Does Salvage Mean? Definition
For vehicle purposes, salvage means that a car was damaged so much that it must be declared a total loss and registered in that way with the state. It can then be sold to a salvage yard for parts or fixed up and sold to a willing buyer.
So, is a salvage title bad? It can be. Essentially, it means enough bad stuff has happened to the car that it can be risky to repair and drive, or should only be sold for parts.
How to Get a Salvage Title: Process
Each state has laws that specify when a car must be declared a total loss and registered under a salvage title. Some, like New York, say that if the cost to repair the car exceeds a certain percentage of the car’s value–75% in New York–it must show a salvage status on the title. Others, like Washington, say it’s required when the salvage value–what the car could have been sold for at a salvage yard–plus the cost of repairs is equal to or greater than the actual cash value. Some states leave the determination up to the insurance company.
The damage requiring a car to be branded as salvage could be from a car accident, hail, fire, flood or vandalism, or it could be from the car having been stolen and recovered. Once the state’s minimum threshold is met, you apply for a salvaged title through your state’s Department of Motor Vehicles. Typically, your insurance company takes ownership of the car and then sells it to a salvage yard or other company where it’s sold for parts or repaired and sold again.
Frequently Asked Questions About a Salvage Title
Buying and selling a car or working through the insurance process after an accident are all complicated enough. But the salvage issue adds a whole new layer of questions. You’re likely wondering, What does a salvage title mean for me? Here are answers to some commonly asked questions.
What Is a Salvage Title vs. Rebuilt Title?
While navigating the world of car titles and decisions, you may be wondering, Is rebuilt title the same as salvage title? The short answer is no, but they’re closely related. While a salvage title means the car was deemed a total loss, a rebuilt title is issued when a previously salvage vehicle is restored to its operating condition or roadworthiness. It can then be registered, driven and sold.
Each state outlines its requirements for obtaining a rebuilt title, and they may call it something else, like a revived or restored salvage vehicle. Regardless, getting a rebuilt title generally includes an application and inspection process.
What Does a Salvage Title Mean for Insurance?
If the insurance company declares your car a total loss and you accept their payout as compensation for your damages, they’ll take ownership of the car, obtain the new title and sell it to a salvage yard or auction company. If your state allows it and you decide to keep your totaled car, you’ll need to apply for the title yourself.
Can you insure a salvage title car? Generally the answer is no, at least not right away. However, once you have the car repaired and inspected, and you’ve obtained a rebuilt salvage title, insurance companies may be willing to provide liability insurance. Other coverage, like collision or comprehensive, might be hard to come by or exorbitantly expensive. Ask your insurance company about coverage before you keep or buy a salvage or rebuilt car.
Can You Drive a Car with a Salvage Title?
For those looking to buy or keep a salvage vehicle, you might be asking, Can you register a salvage title car with the DMV and then drive it? Cars that are deemed a total loss must be registered as salvage with your state’s DMV. However, they are not roadworthy and can’t be driven until you’ve obtained a rebuilt title and your state’s minimum amount of insurance coverage.
[READ: You Hit a Parked Car — Now What?]
What Does Salvage on a Title Mean for Buying or Selling a Car?
A car with a salvage title–meaning, it was deemed a total loss–will most likely be considerably cheaper than the same type of car with a clean title. But is it worth buying a car with a salvage title? Probably not. For one thing, you’ll want to know what type of damage led to its salvage status. Was it a major collision that led to significant repairs? How thorough were those repairs? Was the car stolen and eventually recovered with minor cosmetic damage?
Are you asking yourself, Should I buy a car with a salvage title? Some factors to consider might include the following:
— Purpose: Do you want to sell it for parts, or do you want to drive it? Insurance and a rebuilt title are required for the latter.
— Expertise: Do you or a trusted mechanic have extensive knowledge about cars and how to assess damage? This can help you tell the difference between a good deal and an expensive hazard.
— Insurability: Will your insurance company provide at least your state’s minimum coverage for a rebuilt car? At what cost?
In short, you might be able to get a good deal with a salvage or rebuilt car, but buyer beware. You could end up with a car that’s unreliable, unsafe, expensive to insure, hard to sell or all of the above. For these reasons, it can also be hard to sell a salvage vehicle for anything more than just its parts.
Can You Get a Loan on a Salvage Title Car?
If you’re hoping to finance a salvage car, you may be out of luck. Lenders don’t like to make risky investments, and a salvaged title car is inherently risky. After all, the car serves as collateral for the loan, and a car that’s been totaled is worth much less than its clean title counterpart–and it may have extensive hidden damage to boot. Your odds of getting a loan for a rebuilt title car are better, but it still may be tough and expensive. If your usual lenders decline, try asking credit unions or specialty online lenders, but beware of the terms–and the fine print.
How to Get a Salvage Title Cleared
Once a vehicle has been totaled and registered under a salvage title, federal regulations prohibit it from being cleared and registered under a clean title. The time to fight a salvage determination is when the insurance company is deciding whether or not to total the car after an accident or other adverse event. Negotiations can go a long way, but sometimes legal help may be necessary.
However, in some cases, you can have a salvage title replaced with a rebuilt title. Check with your state’s DMV to see what it takes to have your car registered under a rebuilt or revived title.
How Much Will Insurance Pay for My Salvage Car?
If your car was recently totaled and you’re wondering what your insurance payout might look like, the answer will depend on a number of factors, including:
— Fault: Who was at fault in the accident?
— Location of the accident: States treat fault and negligence in different ways, especially when fault is shared by multiple drivers.
— Insurance coverage: What types of coverage are included in your policy? Does the at-fault driver have insurance? Do you have to pay a deductible?
— Actual cash value: What was your car worth right before the accident?
In a straightforward scenario where the insurance company has agreed to pay for your totaled car, they will calculate its pre-accident value based on things like make, model, year, condition, accident history and upgrades. They’ll generally offer to pay you that amount, minus any applicable deductible. If you’re not happy with the insurance process, you can always hire an attorney to advocate for you.
[Read: Recovering Lost Wages for a Personal Injury Claim]
Need Legal Help Navigating the Salvage Title Process?
Car accidents can get complicated fast. From determining fault to navigating state laws and insurance negotiations, there’s a lot to manage. Let an experienced attorney assess your case and help you get the compensation you deserve.
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How Does a Salvage Title Work? Overview and FAQ originally appeared on usnews.com
