What is a salvage title on a car and how to clean it?

We all want to save when buying, especially when it involves an important asset such as a car. The temptation to buy a car with a salvage title can be great, especially because of its price, but it comes with its disadvantages.

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Here's what a car with a salvage title is, what to expect and how to clear the title to get it off.

What is a salvage title for a car?

When a vehicle is involved in a traffic accident or any other type of accident and the damage exceeds a certain percentage (70% to 90%) of its total value, the insurance company makes the determination that it is not good business to repair it, declaring it a total loss.

What happens next will depend on state law, but usually the Department of Motor Vehicles (DMV) issues a junk or salvage certificate. This title implies that the car cannot be driven, sold or registered in its current condition.

Usually, the insurer sells the car for scrap or to a repair store. If it is restored, most states require it to pass a basic safety evaluation before the DMV can issue a new title, known as a salvage title clearance.

At the time the state issues the new title, it carries with it a warning 'mark' to let the prospective buyer know that it has been revived or rebuilt.

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If you want to delve deeper into the legal aspects, we suggest you review the statutes of each state, such as the California or New York DMVs.

Types of damage that merit a salvage title on a car

It is important to know that a collision is not the only reason a car gets a salvage title. In fact, there are several circumstances that can give rise to this designation and are covered by most insurers:

Problems derived from buying a salvage title

Basically there are 3 and we describe them below:

Fewer alternatives to trade it in or sell it.

Most dealers will not accept a car with a salvage title as a trade-in. Your only options would be to sell it to an independent business or a private party.

Another challenge with these vehicles is that it is difficult to value them well. Most portals for this process assume that the car has a clean title no matter what condition you put on it. Even a badly abused car may not be salvageable.

They don't usually give you an auto loan

Many lenders prefer not to give you money to buy a salvage title because they are concerned about the extent of the structural damage. Another concern is that the vehicle may require a major repair later on that you can't afford, increasing the risk of repossession.

Any lender wants to make sure the car lasts until the loan ends, which may be difficult for a salvage title car. Although there is more flexibility with hail damage, you may not get the amount you are looking for.

It's harder to get insurance

You will most likely get the minimum coverage required by state law for salvaged cars that have been repaired/rebuilt and inspected.

Because of its condition, it represents a higher risk, so you will have to pay more for not having a clean title and some insurers will not even allow you to get car insurance. For liability insurance, it is more about your driving record than the car's history.

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How to clean a salvage title on a car?

A clean car title is one that is perfectly legal and allows the vehicle to be driven normally. If a car has a salvage title it means that it is not roadworthy and therefore you are not allowed to drive it.

However, there is a possibility to clear the title of a car if the problem that causes the vehicle to have this status is solved. In the case of a mechanical breakdown or an accident, a repair shop may be able to fix the damage until the car is in good enough condition to be driven.

Once repaired, it will have to pass the appropriate state's Department of Motor Vehicles (DMV) test and, if positive, the car will have a clean title.

Is it worthwhile to clean a salvage title on a car?

Usually, the repair and subsequent examination to renew the car's title usually add up to a good amount of money, since for a car to have a salvage title is because it is badly damaged.

Therefore, it is usually not very profitable to go through this process, being more profitable to sell the car for parts.

Beware of scams on rebuilt cars

In addition to the legal way we have described above to clean the salvage title of a car, many shops and establishments are dedicated to clean car titles fraudulently, to sell them again as if they were clean cars.

This practice is illegal and is also a scam, because if the authorities find out that your vehicle does not have a legal clean title, you may receive a stiff penalty.

Is it worth buying a car with a salvage title?

If you intend to buy a car with a salvage title, take all the necessary precautions. There are 3 basic suggestions that will help: ask for the original repair bill, have it inspected, and buy it from a reputable dealer.

If the price is affordable enough so that the repair and subsequent cleaning examination by the competent authority will not involve a large amount of money, then you may be interested. It's all a matter of crunching the numbers, and you can save quite a bit of money if you know how to shop around.

English: ¿Qué es un título salvage en un carro y cómo limpiarlo?