Imagine you're combing Craigslist and you run across your dream car priced for thousands less than you'd expect to pay. The pictures are showroom perfect. The only thing you notice is the ad says the car is titled "Salvage." What that means is … NEXT!
"Salvage" or "Rebuilt" on a title indicates that a car was declared a total loss by an insurance company, and its owner repaired and put the vehicle back on the market. We discourage consumers from buying them because it's so hard to tell if they're roadworthy. There's no uniform inspection system in the United States to verify the quality of repairs, and some states, including
Washington, allow vehicles to be sold as "Rebuilt" if they meet certain age or value guides before they were damaged – not because any "rebuilding" occurred.
Salvages are becoming more common and popular as the number of older cars on the road continues to grow. (Older cars are worth less, so sometimes a fender-bender is enough to "total" a car – meaning its cost to repair is almost as much or more than its pre-crash worth). Reasons for being declared a total loss can range from cosmetic hailstorm dents to dangerous structural damage, including perhaps the most difficult to spot of all: flooding.
Salvage and rebuilt cars can be notorious for developing hidden rust and electrical gremlins. Out-of-sight safety systems like air bags might be compromised, too. Salvage and rebuilt cars are ineligible for warranties (even if they're almost new) and banks may be reluctant to lend you money to buy one. Car dealers rarely accept them as trade-ins.
They're also more difficult to insure. PEMCO, for example, insures them on a case-by-case basis if owners can provide receipts for repairs and, if they want Comprehensive or Collison coverage, photographs showing the car's condition. Because of their already lower value, it's easy to total a salvage or rebuilt car for a second time if it's ever in another accident.
Salvage sleight of hand
A "Salvage" or "Rebuilt" brand on a car's title decreases its value by 20% to 40%, compared with an identical car with a clean title. To boost profits on salvages, unscrupulous sellers may move them from state-to-state until the brand gets dropped off the title. If a car has a history of state-hopping, it's a red flag that it may have been totaled – even if the title shows clean!
Fortunately, you don't have to rely on the title alone to ferret out salvages and rebuilds. Get a report from a service like
Carfax to see if the car you're considering has been in an accident. And for even greater peace of mind, ask your mechanic give it the once-over before you buy.