A Different Side of the Coin: Understanding Salvage Car Titles

When people talk about the sale of used cars, the topic of salvage cars is often disregarded. However, salvage cars also comprise a considerably large part of this industry, yet the people refuse to address it because of the stigma attached to salvage cars.

But what are salvage cars in the first place?

In a nutshell, a car is given a salvage title if it has been in a severe accident, and the value of the damage exceeds a certain percentage of the car’s market value before the accident. The common value for this is 70 percent—which means it is given a salvage title if the damage exceeds 70 percent of the car’s initial value—although the exact percentage varies from location to location. Only America and Canada classify cars with a salvage title; a salvage car imported from America to another country besides Canada will not honor the salvage title.

Obviously, when a car is sold as a salvage car, its value depreciates significantly. Instead of paying for the repairs of the car, the insurance company simply pays the owner of the car for the value of the vehicle, then sells the damaged cars to auction houses or retailers. They would then repair the car and tell them.

The salvage title is a double-edge sword for both the seller and the buyer. When a car has a salvage title, its value, once it is returned to the market, will be very low—lower than even the best deals in used car markets. If one considers this alone, salvage cars are great deals. After all, cheap cars are always easy to come by. However, one should also consider that the car being sold as a salvage car was once damaged significantly, and that the car was only repaired. This means salvaged cars, in essence, should be below usual used cars in terms of quality. The buyer is presumably getting what he paid for.

For the seller, while cheap cars should sell like the proverbial hotcakes, selling salvage cars can be difficult due to the stigma attached to salvage cars. Many think that salvage cars are always of poor quality. But just the same, salvage cars are currently preferred by a number of people who want to great cars for extremely low cars. Salvage cars are great for first-time car buyers.

Either way, a car with a salvage title can be a great deal. All purchases have risks, and it is no different from salvage cars.