Find out what the dangers are with salvage titles and how to avoid becoming a victim of salvage title fraud.
The number of vehicles with salvage titles increased by more than 50% in recent years.
Imagine this scenario. You’re looking at used car listings and spot what looks like an amazing bargain, the chance to buy your ideal car at well below market price. However, your dream car might turn into a nightmare if it’s a salvage title.
A salvage title is issued when a car is written off as a total loss by an insurance company. In some states, a salvage title is also issued for stolen vehicles.
Chicago's Channel 7 ABC News produced a good TV segment on this problem and explained that checking the CARFAX vehicle history report on a car can reveal a salvage title and other title fraud.
Generally a vehicle will get a salvage title when the cost of repairing it is between 50 – 90% of its pre-damage value. This figure varies by state, as do regulations regarding the issue of salvage titles.
As well as accidents, salvage titles can be issued due to damage from hail, flooding and vandalism.
Sometimes cars which are written off as total losses by an insurance company are issued a salvage title.
A small number of states give stolen vehicles salvage titles too. These are: Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma and Oregon.
Many cars with salvage titles are rebuilt and resold. Often their sellers fail to disclose this, or even try to hide it and resell it as an ordinary car. You could end up paying thousands over the real market price for an unsafe vehicle.
Even when it’s declared that a vehicle is a salvage title, it’s important to know the facts about salvage titles so that you can make an informed decision.
Vehicles with salvage titles can sometimes have substantial hidden structural damage. This can affect how safe and reliable it is, or lead to expensive repairs. They can also be harder to insure and more difficult to resell.
If you pay a standard market price for a salvage title, you may make a significant loss when you come to sell the car.
Unscrupulous sellers can make large profits by hiding the fact a car has a salvage title. Sellers should always disclose when a vehicle has a salvage title, and in some states this is a legal requirement.
Unfortunately, fraudsters fail to do this or take advantage of the differences in state laws regarding salvage titles to sell cars. Coupled with making cheap cosmetic repairs to a car without repairing underlying structural faults, this can make a dangerous vehicle look sound in paper and in person.
This is when a seller registers a salvage title vehicle in a state with looser title laws. This can result in it appearing as if the car has never had a salvage title, and if necessary it might be registered in multiple states until it loses its salvage title. For more information on title washing, take a look at our most recent title washing infographic on the CARFAX blog.
This is when two wrecked vehicles are sawed in half and then welded together. This can be difficult for average used car shoppers to spot and can result in extremely dangerous vehicles.
Vehicles with salvages titles can be legally and safely returned to the road if they are repaired and rebuilt to a required standard. In this situation, many states require that the vehicle passes a roadworthiness inspection, at which point it may be issued a rebuilt title.
Depending on the vehicle, buying a salvage title is not necessarily a bad investment. If you decide to purchase one, we recommend that you thoroughly check the car’s history and exactly what sort of damage it suffered.
If you buy a car with a rebuilt title, we recommend that you investigate the type of repairs made and, if possible, speak to the mechanic who did the work and see receipts confirming that it was done.
“After running a CARFAX I learned that the car was originally owned in Virginia where it had sustained severe damage, being hit twice–once in the front and a second time in the rear. Then the car was sold to its second owner in Illinois, where the car got into a third accident and was totaled! This is how I learned about title washing, as the Illinois title was a salvage title, but when the car was transferred to Minnesota a clear title was issued for the vehicle. Had it not been for CARFAX I would have likely bought this car having no idea what had happened to it.” – Tim D.