buying salvage car

Is It Worth It To Buy A Salvage Car?

Is It Worth It to Buy a Salvage Car?

Planning on buying a used car? It can be quite tricky because no two cars are alike, particularly used cars. Depending on what a car has been through, the vehicle can work out to be the best purchase you’ve ever made or it could be a total repair nightmare.


Despite the risks, there are some positives to buying a second hand car. For one, you get more value for your money since the original owner already shouldered the cost of the initial depreciation. It is a commonly accepted fact that a car depreciates by 10% the minute you drive it out of the dealership.

These days, buying a used car has become easier and the internet has contributed a lot to this.

Through online marketplaces such as Craigslist and eBay, it has become easy for buyers and sellers to connect.


However, you do need to be careful if you’re considering purchasing a used car. While a lot of people get lucky with their second hand purchases, you can also end up with a lemon. Worse, you may end up unknowingly buying a salvage or rebuilt car. You may not realize it but the car you saw earlier involved in that wreck on the highway can end up repaired and rebuilt and eventually sold in the used car market.


What is Salvage?


In general, a vehicle gets a salvage title when it has been damaged and/or deemed a total loss by the insurance company that paid a claim on it. The criteria for issuing the salvage title differs from state to state.


The California Department of Motor Vehicles considers a vehicle salvage once it has been wrecked and damaged to the extent that the company that insured it considers it uneconomical to repair. If the cost of the damage exceeds the pre-accident value of the car, then it is no longer repairable in the insurance company’s eyes.  


How Do They End Up Back on the Market?


It is not really illegal to rebuild and eventually sell a salvage car. However, the California Vehicle Code requires a seller to disclose that the vehicle he is selling is a salvage. Otherwise he may be subject to a civil suit or penalty.


So how do they eventually end up in the market? A vehicle becomes the property of the insuring company once it pays out the car’s owner. The company then registers it with the Department of Motor Vehicles (DMV) and it is issued a salvage title or certificate.

Repairing A Salvage Car, buying a salvage car

The vehicle is deposited in a salvage yard where it may eventually be auctioned off to dealers, dismantlers, scrappers or exporters. Often, these buyers buy salvage vehicles for the parts. However, some buyers - rebuilders buy vehicles for eventual reselling.


Not All Salvage Cars are Bad


Many vehicles involved in car wrecks sustain such a substantial amount of damage that their reliability and safety is affected despite being repaired. However, some cars may only be slightly damaged but are branded as salvage. In fact, some vehicles may not have even be involved in an accident and are still declared salvage, according to the owner of Our Next Car Dealership, Will Ramirez. Our Next Car Dealership regularly monitors salvage auto auctions and purchases “best” salvage vehicles.


As an example, Ramirez cites the case of cars involved in fires. Even if the vehicles were not directly exposed to flames, they are considered salvage when some smoke transfers to the paint of the car.


He also points out that repair shops typically charge insurance companies more for repairs compared to what they would charge a walk-in client looking to have his car repaired. This practice could tip the insurance company’s decision to declare a vehicle salvage instead of paying for a bloated repair bill. As a consequence, many perfectly repairable cars end up in in the salvage lot.


International buyers know about this and there is now a market for these salvage cars. They are shipped out to other countries where they are repaired and sold at a good profit.


Registration Can Be A Hassle


While it is very possible for one to buy a salvage vehicle, repair or rebuild it and have it up and running, it is another thing to have it registered so it can run on public streets.


A big hurdle is the DMV registration process. A vehicle has to pass through a stringent set of certifications and inspections. The owner should be able to present a title, have a registration application and go through a vehicle inspection with the California Highway Patrol, as well as, a brakes/lights inspection performed by a licensed auto professional.


Probably because of all of these required steps, some vehicles end up on the market with consumers unaware of their history. Some sellers resort to illegally altering vehicle documents to get the salvage title brand removed. These are typically moved to other states and sold as normal used cars.


It is because of this that there is a need to have a comprehensive national system at the DMV level to be able to track and register salvage vehicles. Though there is the Anti Car Theft Act of 1992 that enabled the enactment of the National Motor Vehicle Information System to prevent fraudulent sale of salvage vehicles, not all states are participating due to prohibitive costs.


So for as long as a national tracking system is not yet fully implemented, second hand car buyers are exposed to the risk of unwittingly purchasing repaired but salvage vehicles.


Is It Worth It To Buy A Salvage?


As a rule, it is not recommended. This is according to David Cavano, manager of the car-buying service at the Automobile Club of Southern California. Though it may initially seem like a good deal, the maintenance and repair costs can easily add up. In the end, it might be more financially sound to just purchase a new car.


However, it can work for some. This is especially true for people who are handy with repairs and have their way with tools. As mentioned earlier, not all salvage cars are bad. If you’re able to get your hands on a fairly good vehicle that you can repair, maintain and drive with safety, then the minimal investment would definitely work to your advantage.


A word of advise from Our Next Car owner Will Ramirez - “If you’re going to buy a salvage vehicle, make sure it is properly running, registered and is coming from a trustworthy source.”


Tags: Salvage Car, Used Car, Cost Saving, Car Repair, Car Title