Salvage vs Rebuilt Titles

Salvage vs Rebuilt Titles

Last Updated August 30, 2019 | Meghan Drummond
Contents

If you’re looking for very inexpensive cars, you’ll almost certainly run into vehicles that have a “salvage” title. Though these vehicles are significantly less expensive than others, there are some important caveats to consider.

Salvage doesn’t necessarily translate to “stay away” and rebuilt cars can be great finds. The trick is to understand what these terms mean, what to expect, and how to turn a salvage title into a rebuilt one. For people looking for project cars, people interested in learning mechanics through a hands-on approach, first-time car buyers, or just people who love the styles of older cars, salvage titles can be a perfect way to tick off multiple boxes at once and end up with a great car at a low price.

What is a Salvage Title?

A vehicle that has a “salvaged” title has been written off as a “total loss” by an insurance company. This typically means that it was involved in a serious accident, but it could also have been involved in a flood, a hail storm, or stolen and stripped.

If an insurance company judges that the cost to repair the car is greater than a certain percentage of the total worth of the car at the time of accident, they’ll likely deem it a total loss, which means that most of the time they take the wrecked car and the owner is given a check. The cost to value percentage can vary significantly, which is why not all salvage titles are built equally. In some cases, insurance companies have written cars off as a total loss when the repairs equaled a mere 50% of the total car value. In some instances, it was an inexpensive car to begin with that suddenly needed a new paint job, a very expensive repair, but one that doesn’t affect the car’s ability to function perfectly.

From there, the insurance company may decide to sell the vehicle at auction with a salvage title. Salvage titled cars aren’t road legal, but with a little wrench work, some of them will ride again.

Title with salvage printed at top

What is a Rebuilt Title?

If you’ve purchased a salvaged vehicle but want to actually drive it on the road then you’ll need to have the title changed to a rebuilt one. This requires an inspection that essentially determines whether or not the vehicle has all of the necessary components to be considered a vehicle. It will still need to pass an emissions test, which is as “under the hood” as the inspection gets.

That means that if you’re purchasing a “Rebuilt” car, you should more or less treat it as a salvage car. Approach with caution and assume that most of the parts will require replacing when estimating the cost of getting it road-worthy in your head.

If you have bought a salvage title vehicle and are looking to get it changed to a rebuilt one, then there is a little bit of a process to it.

How to Get a Rebuilt Title

In order to drive a salvaged title vehicle you’ll have to reapply for a rebuilt title, and the process for this will vary significantly by state. In some states, notably Hawaii and Georgia, only licensed rebuilders may apply for a rebuilt title.

For other states there are a few things you can count on needing, and that you should be collecting through the process of rebuilding your car.

diagram showing steps to get a rebuilt title

The Salvage Title

Obviously, you need to establish that it actually was a salvage vehicle, and you actually do own it. Typically for retitling a car, you’ll need the original title anyway, so this one shouldn’t be a huge surprise.

Before and After Pictures

You’ll almost certainly want to take these anyway, but it is actually part of the retitling process in some states, so make sure to take several good quality photos focusing on the parts that you plan to fix. These are also great to share once you’ve finished your rebuild and want to see how far your car has come.

Parts Receipts

In order to establish ownership over not just the car but also the parts, and in order to establish that significant repairs were done, most states require the bills of sale for parts used to fix the vehicle. Depending on state though this can be anything from original receipts to a general description of what work was done and who did it. In general, you’ll want a detailed inventory of the fixes that were made and what new parts were added. These parts will need to be road legal if you’re applying for a license to drive the vehicle on the road.

Inspection

The inspection is one of the more critical components of getting a rebuilt title, and each state has a slightly different inspection process. Before the inspection, you should be prepared to show a vehicle that is repaired, drivable, and emissions compliant. Depending on the state, you may need to pay an inspection fee, so it’s a good idea to limit this and ensure that you only have to go through the inspection process once.

Paperwork

Not surprisingly, there’s at least an application and in some cases a virtual book of paperwork required in order to get your new title. If you go to the DMV page for your state, there will be downloadable forms that you can fill out, as well as a checklist of which pieces of paperwork specifically you’ll need.

Title Fee

Almost every state has a title fee. These can vary from four dollars to around eighty, so check your state’s requirements and have the money ready before you get into the DMV line.

Should You Buy A Salvage Vehicle?

Though many will say that you should never buy a salvaged vehicle, it’s a great way to get an inexpensive project car. It also can be a way to buy the car of your dreams if it’s usually out of your price range. As long as you don’t mind doing the wrench work, a salvage car can be an enthusiast’s dream, providing ample opportunity to learn new mechanical skills. When it’s finished, a rebuilt car will be wholly unique to the person who created it.

But, if you’re relying on your newly purchased salvage vehicle as your daily commuter, you’re probably going to have a rough time. There’s no telling how long it may take to get a salvage-titled car up and running again, and even once you’ve replaced all of the obvious issues it’s possible that there will be additional hidden problems that will need to be addressed.

Of course, because of how vehicle value is assessed and what percentage of it needs to be reached in order to declare a vehicle a total loss, there are actually vehicles being sold with “clean” titles that have had substantially larger wrecks than a salvage vehicle, which is why they’re such a great place to find hidden gems.

Red Mustang on a lift to be fixed

Should You Buy a Rebuilt Vehicle?

There’s nothing wrong with buying a rebuilt vehicle. Just like a salvage vehicle, a rebuilt one will cut a significant amount off of the price now and add a bit to the insurance each month, but unlike a salvage title, you can theoretically drive a rebuilt vehicle. It is road legal, but whether or not it is roadworthy is a little more up in the air.

Just like with a salvage vehicle, if you approach purchasing a rebuilt vehicle as a “project car” then you’re unlikely to have any unpleasant surprises. It’s when you buy a rebuilt vehicle, don’t take it to a mechanic, and then promptly try to drive it to work that you’re likely to have the kind of problems that have led to this “don’t buy rebuilt titled vehicles” mentality.

Buying a Salvaged or Rebuilt Vehicle

When buying a salvaged or a rebuilt vehicle, you’ll want to inspect it like your life depends on it (it more or less does). Unlike the typical inspection, you should give a used vehicle, where you’re looking and hoping there aren’t any problems, in this situation you’ll mostly be inventorying the problems and your ability to fix them. If you’re very comfortable with exterior bodywork then a car that’s missing its entire front fascia might not even faze you. If you’re a teenager looking for your first car on the other hand, that might be a deal breaker, and you’ll want to look for vehicles with more moderate damage.

In some instances, severe spray paint has been enough to declare a vehicle a total loss, but if you’re creative you can either turn that into an art car or even get your first experience doing a body paint job if that’s something that you’re interested in. Hail damage is notorious for rendering perfectly good cars salvage.

Hood of Jeep covered in small dents from hail

If you’re not particularly handy under the hood, then it’s a good idea to get a mechanic that you know and trust to do a thorough inspection. People aren’t always honest with salvage titles, and a car that looks like it just has a rough rear bumper might have significant other problems going on with it related to some of the more critical components of the car. In particular, flood vehicles are known for being the trickiest of all salvage vehicles.

This guide to spotting flood damage in a used vehicle can help you identify the clear signs that a car has been in a flood. While it’s possible to fix a car that has been flooded, there’s always the possibility that water has gotten into the electrical components of the vehicle, which can cause damage that is almost impossible to see and can limit your ability to repair or fix the vehicle.

Much like buying any kind of “fixer-upper” you’ll want to leave a portion of your budget for substantial renovations through the process instead of spending the entirety of it on the vehicle itself. Looking at parts in advance and inventorying your own skills and equipment before even looking at cars can help you stay in budget and not let a car crush lure you into a financially inadvisable situation.

Insurance

The real burden with a rebuilt vehicle is obtaining insurance. If you’re just looking for a beater car or an off-road monster, then carrying liability shouldn’t present a problem, but there will be an issue with getting collision or comprehensive, which can be a bit of deal breaker when you’re thinking about carefully restoring a classic Mustang.

From the insurance companies’ perspective, there will never be a conclusive way to determine what damage was caused by the accident as opposed to being scars from its former life. If you are able to get comprehensive insurance, it’s likely that it will be expensive.

Once again, this is a component that’s dependent on you as much as the vehicle. If you’re a good driver with a long record free of accidents and with an insurance company you’ve stuck with for years, you may have an easier time. Talking to an insurance representative is a good step to take before hitting up the salvaged vehicle auction.

Verdict

Ultimately, we all owe a lot to people who take the time and patience to bring these “salvaged” cars back from the grave. How many first-generation Mustangs waited in junkyards until someone came along and saw the potential? How few would we have remaining today if there weren’t people willing to get their hands dirty to make a car beautiful?

If you love classic cars, you don’t get to be a snob about salvaged titles, even if you think you don’t have the time or skills for one of your own.

Some of the finest mechanics have gotten their start picking apart a project car so that they could score their first wheels inexpensively, and we’re all certainly grateful for their skills today. It’s tough to tell anyone to not buy a salvaged car when we’ve all benefited so much from them being brought back from the grave, but it is important to assess what you want out of the experience and approach every vehicle with caution. If you need a reliable car tomorrow, then a salvaged title probably isn’t the right way to get it.

Pros and Cons of Buying a Salvaged Vehicle
Pros Cons
Lower Vehicle Cost Higher Insurance Cost
Get Experience Fixing a Car Can’t Drive Without Rebuilt Title
May Be Less Damaged Than “Clean Titled Cars” Some Damage Is Hard to See
Can Save a Classic From an Unseemly Fate No Manufacturer Warranty Available

Image Credit: Ford Authority, O'Reilly, Ride Safely, Engine Swap Depot

Salvage vs Rebuilt Titles

Salvage vehicles are affordable project cars and offer a great chance to learn about mechanics from a hands-on perspective. Before jumping in, it’s important to know what the restriction on salvage vehicles are and how to convert a salvage title to a rebuilt title before taking it out on the road.

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