School me on salvage and rebuilt title vehicles

[drypowder]

Perusing Craigslist autos (hey, they removed the personals, so what else is left to browse!) and I see a lot of cars with salvage or rebuilt titles. I don't understand the salvage title situations - who is buying these? Salvage title cars cannot be registered and therefore cannot get plates, correct? So that means the buyer, if he wants to actually drive the vehicle (as opposed to harvest it for parts), has to get the car inspected and the title changed to rebuilt. But if the car was in a condition that could pass inspection, then the dealer or private individual selling the car would have done this themselves, that way they could sell the car with a rebuilt title and get a considerably higher selling price. So I'm left to conclude that these cars cannot pass inspection and need work - and using similar logic, expensive work, otherwise the seller would have already performed this work. What am I missing?

As for the rebuilt title cars, I would guess the average rebuild business is doing the minimum necessary to pass inspection, and that these cars are very likely to be money pits for buyers. Might be different for individuals with rebuilt titles - could be they rebuilt it for their own use and are selling it years later for typical reasons. But of course they could also be doing a minimal rebuild and seeking to dump a vehicle they know has lots of gremlins waiting to get out.

Also, a lot of these salvage and rebuilt cars look very clean - could just be that it's difficult to see bodywork/new paint from pics, or it could be these are flood damaged vehicles. I'm sure Texas and neighboring states are awash(!) in flooded salvage/rebuilt cars.

Would love to hear from people with experience in this murky (to me) corner of the used car market, or from our local wrenches who've seen these cars brought in for repair.

 

[Ikarus1]

salvage rebuilt cars can be registered exactly like any car. They are just marked salvage because they've been totalled, which means more than 25% of the car. That can be anything from an airbag deploying ($$$$), to complete annihilation leaving barely the VIN number.

I have bought salvage titled cars before, just have to inspect them. Don't pay KBB for a salvage car, they're not worth as much. So sometimes can be a deal.

 

[drypowder]

salvage rebuilt cars can be registered exactly like any car. They are just marked salvage because they've been totalled, which means more than 25% of the car. That can be anything from an airbag deploying ($$$$), to complete annihilation leaving barely the VIN number.

I have bought salvage titled cars before, just have to inspect them. Don't pay KBB for a salvage car, they're not worth as much. So sometimes can be a deal.

This is all kinds of confusing to me.

Salvage and rebuilt are two different title statuses. My understanding is that rebuilt title cars can be registered. But that salvage title cars cannot be registered until an inspection and change of title status to rebuilt. Is this incorrect?

As for the initial salvage designation, I thought it applies when insurance deems repair costs are >=100% of the current value of the vehicle. Incorrect? 25% seems like a fairly low salvage cutoff - if someone has a vehicle worth $10k, if they have collision insurance, the insurance company is maxing out payment at $2.5k?

 

[bkfist]

Also, almost nobody will finance a salvaged vehicle.. which or may not affect your situation, but that also includes the "next buyer" and so on, should your ever decide to sell it.

 

[Ikarus1]

my credit union finances them just fine. They use the KBB value of the car no matter the title. You're the one on the hook if you don't pay for it.

 

[Mike Overlay]

What Ikarus said.

Also, after the onslaught of "floods" around the county. A vehicle could have been branded as a "salvage" title. No body or frame damage from wrecks. But future electrical disasters will show up.

Sometimes a salvage title is no big deal. Sometimes they are nightmares. If you dont know what you are looking at, stay away.

 

[Ikarus1]

This is all kinds of confusing to me.

Salvage and rebuilt are two different title statuses. My understanding is that rebuilt title cars can be registered. But that salvage title cars cannot be registered until an inspection and change of title status to rebuilt. Is this incorrect?

As for the initial salvage designation, I thought it applies when insurance deems repair costs are >=100% of the current value of the vehicle. Incorrect? 25% seems like a fairly low salvage cutoff - if someone has a vehicle worth $10k, if they have collision insurance, the insurance company is maxing out payment at $2.5k?

You buy a car from an auction, or insurance company. They get the title when they pay out a total loss. They are responsible for making the 'salvage' designation. 25% is the cutoff and always has been.

You call a DMV inspector after you repair whatever is making it non-roadworthy. Then you can apply for the rebuilt title and slap a tag on it. There's an entire industry in NC doing just this. The DMV at least
makes an attempt to let people know the car has been a total loss (could be a theft recovery also...)

As opposed to buying a FLOOD car from West Texastan or Floodorida which are non-notary states, and you just get the signed title and register it in NC as a normal car.

Generally the smell gave away flood cars (moldy, musty) until people got ozone generators. Now I look for stains in the rear carpet / hatch / cargo area that look like water lines. Excess rust high up inside the inner fender is also a telltale sign.

Basically, stay away unless you know what you are paying for what you are seeing.

 

[J R Green]

I've bought a couple of salvaged cars. One , a ford ranger, was repaired like new and was indistinguishable from one with no damage. My ranchero has a salvage title and the only damage on it is the rear bumper got pushed in about an inch on one side.

Of course you'll have to check out the vehicle well but there are deals to be had there.

 

[drypowder]

OK, I'm getting there, but still confused.

You buy a car from an auction, or insurance company. They get the title when they pay out a total loss. They are responsible for making the 'salvage' designation. 25% is the cutoff and always has been.

So let's say I have a car worth $20k per KBB. If I have $10k in damages, my understanding is collision insurance would pay for the repairs (less deductible), and that I keep the car and title. Is this incorrect?

 

[noway2]

OK, I'm getting there, but still confused.
So let's say I have a car worth $20k per KBB. If I have $10k in damages, my understanding is collision insurance would pay for the repairs (less deductible), and that I keep the car and title. Is this incorrect?

From reading above, no, it sounds like in excess of $5K, 25% value, it would be a "total loss". They would pay you an amount that they think it's worth and keep the car. You could buy it back, and get the repairs done under a salvage title which just indicates that it had been declared "totaled" by the insurance industry.

I should add that people do this and come out money ahead.

 

[drypowder]

I've bought a couple of salvaged cars. One , a ford ranger, was repaired like new and was indistinguishable from one with no damage.

So why didn't the prior owner have the car inspected and get the title changed to rebuilt? He/she could have commanded a higher sale price selling it with a rebuilt title instead of a salvage title. In other words, if the prior owner went to the trouble of having the vehicle repaired to excellent condition, why not go the small extra step of inspection and title change, thereby increasing the sale value of the vehicle?

My ranchero has a salvage title and the only damage on it is the rear bumper got pushed in about an inch on one side.

I would assume the damage extends to the actual metal bumper (i.e., structural damage) and not merely the bumper cover for the insurance company to deem the car a total loss?

 

[Ikarus1]

So why didn't the prior owner have the car inspected and get the title changed to rebuilt? He/she could have commanded a higher sale price selling it with a rebuilt title instead of a salvage title.

I would assume the damage extends to the actual metal bumper (i.e., structural damage) and not merely the bumper cover for the insurance company to deem the car a total loss?

Don't discount the price of labor. A good body shop charges anywhere between $75-125hr, thanks in part due to the state of NC charging 'labor tax' now. Doesn't take many hours to add up to a thousand bucks.

 

[bkfist]

my credit union finances them just fine. They use the KBB value of the car no matter the title. You're the one on the hook if you don't pay for it.

Our credit Union won't touch anything with salvage title, regardless of the "deal" you are getting. Also, anything over 10 years and 110,000 miles.

 

[drypowder]

From reading above, no, it sounds like in excess of $5K, 25% value, it would be a "total loss". They would pay you an amount that they think it's worth and keep the car. You could buy it back, and get the repairs done under a salvage title which just indicates that it had been declared "totaled" by the insurance industry.

I should add that people do this and come out money ahead.

OK, let's spell this out for me.

Car is worth $20k per KBB; involved in accident and suffers $10k in damages. Insurance company pays how much? $10k and title goes to insurance co?

 

[Ikarus1]

OK, let's spell this out for me.

Car is worth $20k per KBB; involved in accident and suffers $10k in damages. Insurance company pays how much? $10k and title goes to insurance co?

depends on if you carry GAP or not as to what is paid

 

[easternnc4me]

My current work car/daily beater has a salvage title. It's a 2010 Kia Soul. I bought it from Copart near Dunn 4 years ago. It was totaled because of hail damage. I could care less about the dents. It gets me from point A to point B and I have been pleasantly surprised with it. I've bought a couple of trucks from there that were totaled because they were hit in the back and bent the rear frame. Had a body shop bend the frame back up and had no problems what so ever. My brothers buys cars from Copart frequently. Everyone from there comes with a salvage title. His preference it ones with rear end damage as they are easier to fix in general.

 

[thbassin]

OK, let's spell this out for me.

Car is worth $20k per KBB; involved in accident and suffers $10k in damages. Insurance company pays how much? $10k and title goes to insurance co?

In my experience no. We’ve had two cheap paid for vehicles get hit by other drivers. Both were perfectly driveable but since the repair costs exceeded a certain percentage of the vehicles actual worth, the insurance company decided to total it . In both cases the cars were worth about $2500 but even though the damage was minimal, due to the high cost of bodywork, the repairs would have cost more than $2500. Both were hit in the rear quarter which becomes an expensive repair.

On the other hand I had another $2500 car that was hit in the door by a lady in a parking lot. Since the door was easily replaceable, I asked the repair shop to do what they could to fix it without the car being totalled. They were able to fund a used door and paint it and install it without it costing so much that the insurance company that totaled it.

Then in the case of the first 2 cars, when they are totaled, the insurance company will usually offer to let you keep the car. We did this in one case. In order to get the payout, I was required to go to the dmv and have a salvage title issued. After I did that, I literally drove it down to dmv , had it inspected and a rebuilt title issued since the damage was superficial body damage( just expensive to fix) Got like 2000 from the insurance co. And drove the car for another year. Sold it a friend end who’s still driving it like 4 years later.


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[drypowder]

In my experience no. We’ve had two cheap paid for vehicles get hit by other drivers. Both were perfectly driveable but since the repair costs exceeded a certain percentage of the vehicles actual worth, the insurance company decided to total it . In both cases the cars were worth about $2500 but even though the damage was minimal, due to the high cost of bodywork, the repairs would have cost more than $2500. Both were hit in the rear quarter which becomes an expensive repair.

In this example, the repairs are >=100% of the value of the vehicle. This makes perfect sense to me.

 

[drypowder]

depends on if you carry GAP or not as to what is paid

Let's keep it simple. Car is owned outright (no liens, no GAP insurance, $0 deductible).

$20k KBB value, $10k in estimated repair costs. How much does insurance pay?

 

[thbassin]

In this example, the repairs are >=100% of the value of the vehicle. This makes perfect sense to me.

Right I don’t know what the actual number is. Probably like 75% and they’ll total it


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[Mike Overlay]

From reading above, no, it sounds like in excess of $5K, 25% value, it would be a "total loss". They would pay you an amount that they think it's worth and keep the car. You could buy it back, and get the repairs done under a salvage title which just indicates that it had been declared "totaled" by the insurance industry.

I should add that people do this and come out money ahead.

Buy it back? They never owned the vehicle to begin with.

The insurance company is to make you whole again. Dont ever "sell it" as a settlement. And when you take the repair settlement, dont forget the depreciation values of now having a wreck car and or a salvaged title.

 

[Mike Overlay]

Let's keep it simple. Car is owned outright (no liens, no GAP insurance, $0 deductible).

$20k KBB value, $10k in estimated repair costs. How much does insurance pay?

Dont use KBB. Use local current market values.

 

[Ikarus1]

Let's keep it simple. Car is owned outright (no liens, no GAP insurance, $0 deductible).

$20k KBB value, $10k in estimated repair costs. How much does insurance pay?

dunno man, all that is usually negotiable. All I know is if the estimated damage I'd more than a quarter of the cars value they will total it, and sometimes give you the option of keeping the car. I had a Plymouth Sundance POS that I paid $2000 back in the 90s. Dude ran into my lane and sideswiped me going to work. I called his insurance company, which sent an adjuster to estimate damage. They sent me a check for $1700 and let me keep the car and the title. I sold it with duct tape holding the bumper on and a penny making electrical connection on the alternator for $400

It all depends in the adjuster and ins. Company. I have had to fight my own insurance to pay cars completely off before.

 

[J R Green]

So why didn't the prior owner have the car inspected and get the title changed to rebuilt? He/she could have commanded a higher sale price selling it with a rebuilt title instead of a salvage title. In other words, if the prior owner went to the trouble of having the vehicle repaired to excellent condition, why not go the small extra step of inspection and title change, thereby increasing the sale value of the vehicle?

I would assume the damage extends to the actual metal bumper (i.e., structural damage) and not merely the bumper cover for the insurance company to deem the car a total loss?

Really no idea. I registered the vehicles and there was no issue with DMV. The one I have now is tagged and inspected but the registration still reads salvaged.

https://www.dmv.org/nc-north-carolina/salvaged-vehicles.php

 

[bkfist]

Let's keep it simple. Car is owned outright (no liens, no GAP insurance, $0 deductible).

$20k KBB value, $10k in estimated repair costs. How much does insurance pay?

I see what you're getting at... Car worth $20K. (Based on what ever method your insurance company uses... Might be KBB, might be average selling price in your area based on some other "book"... )
Vehicle worth $20K, sustains $10K in damages, insurance company pays you $20K, minus deductable.
Insurance company then owns car. Most insurance companies will allow you to buy it back at salvage value, say $4000... If it's primarily cosmetic damages, you could buy it back at that value with a salvage title, and drive the beat up vehicle for years after a safety inspection and a "restored" title is issued. You might have to put a few grand into the vehicle to make it pass inspection, windshield, door, etc.
Does this answer your question?

 

[drypowder]

I see what you're getting at... Car worth $20K. (Based on what ever method your insurance company uses... Might be KBB, might be average selling price in your area based on some other "book"... )
Vehicle worth $20K, sustains $10K in damages, insurance company pays you $20K, minus deductable.
Insurance company then owns car. Most insurance companies will allow you to buy it back at salvage value, say $4000... If it's primarily cosmetic damages, you could buy it back at that value with a salvage title, and drive the beat up vehicle for years after a safety inspection and a "restored" title is issued. You might have to put a few grand into the vehicle to make it pass inspection, windshield, door, etc.
Does this answer your question?

Yes, you understood what I was getting at. I.e., the insured gets made "whole".

Instead of paying you the value of the car and taking ownership of the car, why wouldn't they just pay for the repair? Insured still gets made "whole", but it's cheaper and less headache for the insurance co.

 

[S&WNewb]

This may be helpful to read through (was for me) with all regs and statutes: http://www.semasan.com/semaga/TagTitleToolbox_NC.pdf

Part 3A covers salvage titles.

Link to other states: http://www.semasan.com/page.asp?content=tag_title_toolbox&g=SEMAGA

 

[Chdamn]

Salvage titles are issued when a car has had major damage. A rebuilt title is issued once the repairs are made and meet specific standards.

So salvage title cars may have been rebuilt but may not be up to standard or may be not allied for a rebuilt title.

Either way the cars are worth half of what good blue book says they are worth. Period.

So here’s how this happens. I wreck my car. It goes to the repair shop and the damage exceeds what my insurance company will accept so they total the car and the car is stamped salvage. The repair shop buys
It on the cheap and makes the repairs and sells it with the salvage title.

Or I demand they fix it and it gets a rebuilt title.

Now here’s the thing. The insurance company may not file for the salvage title and the car gets rebuilt and sold anyway. Clean title.

Or the car doesn’t have full coverage insurance and gets wrecked rebuilt and sold with a clean title.

I point this out to say that there are a huge amount of what should be salvage or rebuilt cars sold with clean titles and clean car fax reports.

A car with a salvage or rebuilt title can be a way to get a pretty good deal on a decent car or a complete nightmare.

 

[bkfist]

Yes, you understood what I was getting at. I.e., the insured gets made "whole".

Instead of paying you the value of the car and taking ownership of the car, why wouldn't they just pay for the repair? Insured still gets made "whole", but it's cheaper and less headache for the insurance co.

I don't know why they want to total the car in those instances... I think part of it is that many people probably rather have a vehicle that wasn't involved in such a serious wreck, and partly because when something is damaged to such an extent, they probably have experienced the final cost sometimes being far in excess of the estimate. (Finding further damage as repairs progress.)
I wouldn't doubt liability plays a role also. If YOU buy the vehicle back and do the repairs then something goes wrong later, it's your problem, not theirs. (Twisted frame, radiator leaks after a couple hundred miles, tires wear unevenly, rattles, squeaks, water leaks around windows or doors, electrical gremlins. Etc.

 

[Mike Overlay]

Yes, you understood what I was getting at. I.e., the insured gets made "whole".

Instead of paying you the value of the car and taking ownership of the car, why wouldn't they just pay for the repair? Insured still gets made "whole", but it's cheaper and less headache for the insurance co.

Because many many many people just give up ownership and the Insurance companies take them to auction to recoup alot of their money

 

[Gazengine]

My daily driver has a salvage title. Half the cars I have owned had salvage titles.I buy them at the wreck yard and rebuilt them myself. The only problem is resale value if
you ever want to sale it. Some banks will still loan money on them, just not the full amount.
Check it out good or get someone else to check it for you and you should be ok.

 

[GymB]

If you buy a new car and that car is later in an accident, then despite the repairs being done the thing is never right again...never. The insurance company would rather not be on the hook for the impossible task of making something perfect, so they total it.

I expect that few, if any, of the folks in this discussion tend to buy new cars or tend to expect their cars to be perfect, so the behavior of the guy who would rather just have the car totaled and buy another new one is kinda foreign, but it makes good sense to him.

 

[noway2]

I expect that few, if any, of the folks in this discussion tend to buy new cars or tend to expect their cars to be perfect

I see the financial logic in buying a used car. The moment they become titled, before they're even driven off the lot, they lose a tremendous amount of value. They are also expensive. Very expensive for something that rolls, rusts, and gets hit.
That being said, there are two reasons that I buy new cars. One, I know the maintenance history and can make sure it got things like the oil changed. There are folks who will lease a car and never do a thing to it. Two, I don't know about this state, but in some states only new cars have lemon law protection. I bought (leased, thankfully) a new car that allegedly had a firmware bug that caused the check engine light to come on every few weeks. After more than 13 repair attempts and having the thing at the stealer-ship over 20 times in the first year I got fed up and when they wouldn't abide by the statutes regarding lemon cars, filed a lawsuit and got my money back plus attorney fees. The car was obviously resold and I doubt that it had an issue was disclosed because I started getting survey letters in the mail saying your X was recently in for service after I turned it back in at the frequency of the light coming on. One day I sent them a copy of the legal settlement with a simple letter that said, "This would be comical if the ramifications weren't so serious." and I never got another one.

Edit to add: my wife's car, purchased new, is a 2006 model with ~130K miles on it. My commute car, purchased new in 2008/2009 has ~260K miles on it and only cost $16K when I bought it. My third vehicle is a 1999 Ford Ranger that I bought used after the lemon incident above in 2001. It has about ~115K miles on it.

 

[doose]

Let's keep it simple. Car is owned outright (no liens, no GAP insurance, $0 deductible).

$20k KBB value, $10k in estimated repair costs. How much does insurance pay?

according to edmunds.com, insurance would pay $10k less deductible. According to edmunds, a car is declared a "total loss" for damage exceeding 75 - 90% of blue book value. if the car is declared a total loss, the insurance company will cut you a check in the amount of the blue book value, less any deductible. You will surrender the title to the insurance company. you can usually buy back a total loss car for its salvage or scrap value, usually around $500.

 

[RedneckFur]

Honestly, it can depend on the age and value of the car. I used to own a 1999 Chevy Blazer. They're great, reliable SUV's, but didn't have high resale value. A fender bender that crunched up the bumper on it could have "totaled" it, in theory, despite it being perfectly driveable.

 

[Chdamn]

My wife drove a salvage title car for several years so we could bank money to buy her a nicer car. It was a nissan altima with frame damage and you couldn't keep it aligned for crap. But it was immaculate and low mileage. At the time the blue book retail on that car was a little over 12 grand. I paid $2200 cash for it. Looked great and the engine, trans and all the electronics and interior were great. Only had 20,000 miles on it. I just kept the tires rotated more frequently than usual and put cheap tires on it when they wore out. 5 years later we had 10 grand saved up for a down payment plus another $800 that her car was still worth.

Honestly, it can depend on the age and value of the car. I used to own a 1999 Chevy Blazer. They're great, reliable SUV's, but didn't have high resale value. A fender bender that crunched up the bumper on it could have "totaled" it, in theory, despite it being perfectly driveable.

 

[GymB]

I see the financial logic in buying a used car. The moment they become titled, before they're even driven off the lot, they lose a tremendous amount of value. They are also expensive. Very expensive for something that rolls, rusts, and gets hit.
That being said, there are two reasons that I buy new cars. One, I know the maintenance history and can make sure it got things like the oil changed. There are folks who will lease a car and never do a thing to it. Two, I don't know about this state, but in some states only new cars have lemon law protection. I bought (leased, thankfully) a new car that allegedly had a firmware bug that caused the check engine light to come on every few weeks. After more than 13 repair attempts and having the thing at the stealer-ship over 20 times in the first year I got fed up and when they wouldn't abide by the statutes regarding lemon cars, filed a lawsuit and got my money back plus attorney fees. The car was obviously resold and I doubt that it had an issue was disclosed because I started getting survey letters in the mail saying your X was recently in for service after I turned it back in at the frequency of the light coming on. One day I sent them a copy of the legal settlement with a simple letter that said, "This would be comical if the ramifications weren't so serious." and I never got another one.

Edit to add: my wife's car, purchased new, is a 2006 model with ~130K miles on it. My commute car, purchased new in 2008/2009 has ~260K miles on it and only cost $16K when I bought it. My third vehicle is a 1999 Ford Ranger that I bought used after the lemon incident above in 2001. It has about ~115K miles on it.

I have purchased 3 new cars in my life. A 1994 Honda Accord, just because I could, and two Jeeps, one for my wife and one for my older daughter. I tend to like 3 yr old cars, good brands and models of course, with dealership maintenance records. Last was a 2007 Lexus that’s still going strong, only issue is that the gas gauge needs to be calibrated, it runs out showing 58miles left in the tank.

My next car might be new, but what I’d really like is a solid old Tacoma.

 

[Crazy Carl]

I'd like to find a salvage-titled Harley Evo Sportster to build a rigid framed chopper. No sense paying for a "good" title, as the engine/tranny, part of the wiring harness & maybe the fuel tank will be the only parts retained & the custom frame will require titling as a special construction.

 

[drypowder]

Thanks for the info, fellas.

Was doing some Youtubing on this issue and that led me to curbstoning. Seems like this is a common thing on Craigslist and is tougher to spot than the straight up scammer who wants you to put money in escrow for a car they will ship to you.

Lots of ways to get screwed when buying a used car!

 

[drypowder]

Now here’s the thing. The insurance company may not file for the salvage title and the car gets rebuilt and sold anyway. Clean title.

Or the car doesn’t have full coverage insurance and gets wrecked rebuilt and sold with a clean title.

I point this out to say that there are a huge amount of what should be salvage or rebuilt cars sold with clean titles and clean car fax reports.

How does one spot these situations?

When I bought my Honda used, I had a pre-purchase inspection, and would certainly do that on the next car. But are mechanics going to spot electrical damage from flooding if the car isn't showing obvious signs yet or throwing codes, or structural damage that has been repaired to yield consistent gaps between panels (but obviously a repaired frame will no longer have the crash/crumple characteristics of the OEM design)?