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Is a Car With a "Salvage" Title a Good Deal?

By Ryan Hurlbert on January 10th, 2010

Auto Insurance

When shopping for a used car, it is hard not to notice the bargains. You know, those cars that are just a little less expensive than the others. The car looks OK, drives OK, but something is a little fishy.

Then the other shoe drops--the car has a salvage title.

Repairs? You probably don't want a car that has had repairs, you want one that has had no damage at all. Still, the car does look good and seems to drive OK, and boy, you are saving money!

So, just what is a salvage title and what does it mean to the purchaser of the car? Can you get a loan to buy it? What about auto insurance? Are premiums going to be any higher?

Branded Titles

Titles are branded to indicate that the vehicle was totaled by an auto insurance carrier. Laws governing when a vehicle is totaled vary by state, but when the cost of repairing a damaged car exceeds the threshold, the vehicle is deemed a total loss.

The titles to these vehicles are branded to indicate they were totaled, and the brand cannot legally be removed. Vehicles are then sold at insurance auctions, and either stripped for parts or repaired. Some states require an inspection of the repaired vehicle, but others don't.

Once a vehicle is repaired, a new title is issued with a "Salvage" or "Reconstructed" brand on the title.

Vehicles that are stolen and recovered often carry a "theft recovery" brand on their title. Some vehicles are stripped of parts before they are recovered, are too expensive to fix, and are deemed totaled. Others are not recovered until after the insurance company has paid the claim, and they are simply auctioned off.

Many people think that a "Theft Recovery" brand is a safer buy than a "Salvage" brand because the car was not involved in an accident. While this is sometimes true, often stolen vehicles are abused and the real damage is hidden in the engine or transmission, the suspension, frame or safety systems.

Should You Buy it Anyway?

The safety and viability of any vehicle with a branded title lies in the quality of the repairs.

Definitely have the vehicle inspected by a body shop you trust, and not the one that did the original repairs. It may cost you a few dollars, but they can check to make sure the car is straight and the repairs are safe. Even if your mechanic gives it a clean bill of health, you should have a body shop look over the car as well.

A car with a branded title is worth 40%-60% of what the same car with a clean title is worth. Make sure the price you pay reflects the title status.

Many auto insurance companies do not write comprehensive or collision coverage on a car with a branded title. Since it can't be insured, most financial institutions won't make an auto loan on a vehicle with a branded title.

So, if the car checks out, you plan to pay cash, and you don't mind that you can only get liability coverage for it, you may be able to save some money on a car with a branded title.

A Note About Clean Titles

A clean title does not mean that the car has not been damaged and repaired. It simply means that it was not deemed a total loss by an auto insurer. A car history report can show some damage history, but not all.

If an insurance claim was not filed, the damage and repair may not be noted in the history report. Protect yourself, and have the vehicle inspected by an independent, knowledgeable party.

Compare car insurance prices and get insurance information quickly and easily with compuquotes.com. Fill in your zip code and get started. You may save enough on insurance to afford that hot number with the clean title after all!

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