Salvage Cars and when to buy them.

Salvage cars are those that may require extensive repair works and the expense for that repair is greater than the price/ value of that car. Whenever this situation arises, the car is declared salvage. In certain cases, if there is a significant damage on the frame of the car due to an event like accident or hurricane, it is also determined to be salvage by the inspection agency. In some cases cars with no damage, like a theft recovery are re-branded and titled as salvage.

Generally the automobiles destroyed by accidents or natural calamities like flood go under the salvage title. Some of these (especially flooded) cannot be sold or operated in the USA and is usually exported to developing countries. The cars are usually auctioned by the insurance companies and salvage dealers buy those cars re-sell them. Before presenting for sale, sometimes some repair works are done to those salvage vehicles.  The salvage cars are sold on for much lower than the market rate determined by a blue book. However, the performance by those cars cannot be predict correctly and should be purchased after through inspection. 

I have usually seen people buy late model salvage cars and keep them for a long time like greater than 10 years or so. The biggest disadvantage is that trying to re-sell these cars can be a long process, since buyers usually try to stay from salvage titles. So unless you are in for the long run, buying a salvage car for a couple of years may not be very economical.

Financial institutions do not finance purchasing of salvage car.  If you can manage the required financing in any other way, only then consider salvage car purchase. 

Selection of the right salvage car is critical to being benefited out of a salvage car deal. Below some guidelines are provided that can help you during the purchasing process.

1.  Avoid the cars with flood or fire history

The salvage cars that have underwent fire incidents or flood, are generally not operable for long irrespective of repair works and in most states it is illegal to use these on the road. Therefore, avoiding such kind of salvage car is beneficial.

2. Check for the damage rating

Generally, the salvaged cars are rated according to the extent of damage.  “A” stands for terrible kind of damages, where as “B”   stands for bad.  “C” and “D” refer to repairable damage. However, C and D are hugely available in the market.  You may have to find a workable one among the A or B categories to get a deal.

3.  Get an accurate estimate to fix damages

By knowing the exact condition of significant parts and area, you can predict the future functionality and repair cost to some extent. Do not leave that aspect unobserved. Most salvage dealers are pretty upfront of the damages on their websites. But do remember, that some may try to hide the severe damages in different ways. So go in with your mechanic for proper damages assessment and estimate to fix those.

4. Consider older vehicles

While deciding the salvage title, the value of car and required repairing cost is considered. The older cars (5 to 8 Yr olds)  have low value and that is why those get salvage title even with low repairing cost needed. Therefore, the older cars with salvage title often are better choices for purchase.

5. Decide the price

Salvage cars are generally pieced more or less of  60% to the price of same model from the same manufacturer.  You can get an idea of the higher ceiling of price for any salvage car.

6.  Calculate the benefits (if any)

Do a calculation. Calculate the total cost of making the vehicle ready for running on road.  Add the total cost of required repairing to the purchase price. Also, add the costs of title/registration. Does the total cost far lower and make sense compared to clean title cars that you can buy in your current market? Do you see a long tem service life / utility once the car gets drivable? If yes, only then you can proceed.

7.  Know the history

Use the VIN of the car to track the history of respective car. You can get sure in a way that the car is not stolen or has no illegal aspect attached to it or if it was double salvaged.

To conclude , if you don’t want to go through the pain of find and fixing a salvage there are a lot of sellers who do that and try to flip a salvage car on craigslist and other popular marketplaces. They will usually price it at 60 to 70% of comparable clean cars. Some times they don’t write if the car is salvaged. So if you see a car in that price range call and verify the car’s title and status.  You don’t want to go and spend time looking for a car thinking it is clean, where it is indeed salvaged.