A salvage car lot waiting for auction with stacked cars

Are Salvage or Rebuilt Title Cars Worth It?

Milad Hassibi October 2, 2019

Buying a new car can be exciting for any consumer. With so many vehicle brands, colors, and options to choose from, it can all seem overwhelming. If you are looking to purchase a car for a discount, you may be interested in learning more about salvage or rebuilt title vehicles.

Salvage or rebuilt title cars can offer consumers a deep discount over a clean title vehicle, but there are some key points to be aware of.

What is a Salvage or Rebuilt Title?

Each and every brand new vehicle sold in America comes with a “clean” title. However, if that car is involved in an accident, fire, or theft that costs more to fix or repair than the current fair market value of the car, the car’s auto insurance provider may choose to issue the car a salvage or rebuilt title.

A salvage or rebuilt title essentially means that the car was damaged enough to the point where the insurance company thought it would be more affordable to pay out the car’s fair market value to the car’s owner instead of paying for the necessary repairs.

A car has its brakes repaired

As an example, say you own a 2016 Toyota Camry with a fair market value of $15,000. If the car was involved in an accident that is estimated to cost $20,000 to repair, the insurance provider may choose to just pay the fair market value ($15,000) to the owner directly with a check.

Once the car has been given a salvage title and the owner has been issued a check for the fair market value of the car, the car is often sent to a junkyard or scrapyard, where it may be purchased by anybody in the public with a salvage title.

Many of those who purchase a salvage title vehicle from a junkyard hope to repair the damage with the car and resell it for a profit.

Are Salvage or Rebuilt Title Cars Safe?

It depends. Salvage titles are issued when a vehicle has been involved in an expensive or significant incident.

Insurance companies are not in the business of losing money, and the fact that the car was given a salvage title makes it clear that the car would cost too much to repair to bring back to its original and safe condition.

Many auto body shops take in or purchase salvaged or rebuilt title cars and repair them to their original condition in order to resell them. However, many allege that these shops do not perform the high-quality auto repair work that an insurance-approved body shop would normally perform or require.

These body shops may fail to inspect or repair essential safety features of a car, such as the airbags, the vehicle’s frame, etc. These body shops can only make money if the cost of the repairs are lower than the price they sell the vehicle for, which can lead these shops to cut corners.

Additionally, salvage title vehicles can be sold at deep discounts of 30-50%, which can be tempting for many consumers. However, there is a reason for the price. Besides the lack of attention to detail many of these overnight repair shops have, most insurance providers will not insure a salvage title vehicle.

If you are thinking of purchasing a salvage or rebuilt title vehicle, its best to ask your auto insurance provider if they can provide coverage for the car in the first place.

Final Note

Although buying a salvage or rebuilt title vehicle can offer you significant savings over a clean title car, there are some downfalls. If you are looking to get an auto loan but have less than perfect credit, CrediReady can help. Our partners can help you get the financing you need today. To learn more, fill out our 100% free no-obligation loan inquiry form today.

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