What Salvage, Junk and Rebuilt Titles Really Mean
While car shopping, you may have seen a car that is priced considerably lower than other similar cars in the area. You think to yourself, “it must be too good to be true… or is it?” Then, once you read further about the description, you see the word “salvage” in the description. Since the seller may have conveniently omitted the fact that the car has a salvage title, you should always ask them directly if the car has a clean title over the phone and also run a vehicle history report from a company like CARFAX or Experian AutoCheck before going any further.
Your gut tells you that the deal is, in fact, too good to be true. The side of you that’s trying to get a deal, however, is thinking that maybe, just maybe, you’ve stumbled across a bargain that others have missed. Listen to your gut on this one.
A salvage title means that a car has sustained enough damage that it has been declared a total loss by the insurance company. This may have been the result of an accident, a flood or in some cases, theft. To be declared “rebuilt,” or “rebuilt salvage,” a car must be repaired to a condition that is deemed roadworthy. A “junk” title means that the car is not roadworthy.
Some cars can sustain massive amounts of damage without being declared “salvage” because they were bought back before the insurance company took possession of them (typically to send the car to a salvage yard). The owner is then responsible for repairing the car to meet safety standards.
If you think all of this sounds scary, it should. A car with massive damage to the rear can be cut in half with a new rear end welded onto it. Stories like that have convinced me that you should never bother with a car that has a rebuilt title, because they will never be the same again. There may be some instances where cars are of little value (less than $5,000) to begin with and have sustained minor accidents which causes them to be declared totaled, but at that price point I think it is worth it to spend an extra $1,000 for the peace of mind alone.
If uncertainty about the car’s background and fear of repairs isn’t enough, consider that some insurance companies may not insure the car and you will have a much harder time reselling the car later on.
There are just too many cars out there to waste time and money on with one that has anything less than a clean title. Leave that gamble for someone else who is feeling lucky.
To minimize the risk of getting a car like this, you should always take three steps before buying a car on the used market:
- Ask the seller directly, “Does this car have a clean title?”
- Spend the $15-30 for a vehicle history report
- Spend $200-500 or so for a pre-purchase inspection from a professional mechanic of your choosing, not the seller’s
