With the prevalence of auto accidents in the US today and the increased purchasing of used cars in a bad economy, it is extremely important for car buyers to know if they are purchasing a vehicle that has previously sustained damage. Understanding what a salvage title is can aid in this process. Many people have never even heard of a salvage title, while others have heard the term but do not have a full understanding of it.
In the majority of situations, a salvage title is attached to a vehicle when it sustains 75% or more of its value in damage. A vehicle that costs $10,000 and sustains $7,500 or more in damage would be given a salvage title. Referred to as a junk title in some states, the purpose of a salvage title is to indicate if a vehicle is fit to drive or not. Vehicles with a salvage title are deemed unfit to drive.
However, there are 11 states that use salvage titles to indicate if a vehicle has previously been stolen as well. Carfax.com indicates that these states are Arizona, Florida, Georgia, Illinois, Maryland, Minnesota, New Jersey, New Mexico, New York, Oklahoma, and Oregon.
There are also slight variations in requirements for a salvage title. For example, Florida requires a vehicle to sustain 80% of its value in damage before receiving a salvage title. Minnesota requires that a vehicle have a minimum value of $5000 before the damage, and an insurance company must deem the vehicle "repairable total loss."
Vehicles that acquire a salvage title can be re-salvaged if enough auto collision repairs
are done to lower the percentage of total damage to fall under that salvage title requirement. However, buyers should be careful when purchasing a re-salvaged vehicle.
As stated by the Arizona Motor Vehicle Division, "there is risk involved in buying a restored salvage vehicle. While many of the parts may be new, there will be some that are not, and even trained mechanics cannot always gauge the life expectancy of a vehicle. Further, the vehicle will be difficult to resell if you ever choose to, and very few, if any, dealers will take it as a trade-in.”
It also illegal to sell a vehicle and not disclose that it once had a salvage title attached to it. This is why the title will be marked re-salvaged to indicate that a vehicle has been repaired and no longer has a salvage title. If the title does not indicate the vehicle is re-salvaged, then it most likely is not.
In most states, it is required that individuals submit receipts for auto collision repairs in order to get a title re-salvaged. However, because not all states do this, it is a good idea to make the seller show you proof that the auto collision repairs were actually done, as well as which repairs were done, even if the title says the vehicle is re-salvaged. This could save buyers an enormous amount of stress in the future.