Are you considering buying a salvage car? A salvaged car can actually be great value for your money. However, it may require a lot of work in terms of troubleshooting, fixing, and insuring the vehicle. This means you need to make some calculations to determine if you are saving any money by taking this route. If you know how to fix cars, a salvaged car can be a good deal. But if you don’t, you’d be more than likely to spend more on the car than its actual value.
Here are five tips that can help you decide whether or not to buy a salvage car.
In most cases, when a car is designated as “salvage,” it’s because it has been in an accident and the insurance company has determined that the cost of repairing the vehicle outweighs its actual value. In some states, though, cars that have been damaged due to fire, flood, theft, hail, or those taken under repossession may also be designated as salvage. In the case of damaged cars, you need to consider the severity of the damage. If it’s an older vehicle that has, for instance, burnmarks in the interior, you might be able to fix it up with seats and carpeting that you get from salvage yards, and you could end up with a perfectly usable vehicle.
You will need to consider financing, warranty, and registration. Although it’s very unusual for salvage vehicles to come with any warranty, some salvage dealers may offer a limited 30-day warranty. It will also be difficult to get financing to buy a salvage car. Most salvage dealers will insist on cash purchases, and is unlikely that a lending institution will lend you money for a salvage car unless you have enough assets for a personal loan. Getting insurance coverage can also be problematic.
You will have to prove that the car is drivable, and even then you may only be able to get public liability and damage insurance unless you can prove that the vehicle has been restored to the point where it’s as good as any other vehicle on the road. As to registration, many states require salvage cars to be inspected by a police officer or a licensed repair shop before they can be registered. Your state DMV can provide you with further information.
As a general rule of thumb, a salvage car that has been totally rebuilt is usually worth about 60% of the value of the same car if it had a clean title. So, if you’re considering rebuilt salvage cars, look at the Blue Book value, and multiply it by 0.6. If the asking price is lower, it’s likely a good deal. But if you’re bidding at an auction, don’t go above 60%. This calculation assumes that all the damage has been fixed, and that might not be the case. If all the repairs haven’t been done, and the vehicle isn’t 100% restored, deduct the cost of any repairs you’ll have to make from that value.
If you prefer to buy online, you may not be able to have a pre-purchase inspection done. But if you can, make sure that you use a mechanic that has no ties to the seller. An inspection can tell you what you’ll have to do in terms of repairs. You might have to pay a mechanic to examine the vehicle, but this may very well save you money later. The seller may not list every issue, and your mechanic can identify problems. This could give you leverage to ask for a reduction in price.
A post-purchase inspection may also help save you money. Keep in mind that if you want to get a clear title on your salvage vehicle, it’s going to have to be rebuilt to road-worthy condition, and then inspected. It’s best to know what you’re getting into, and where you need to start.
Be careful where you buy salvage vehicles. You can get great deals at online car auctions, and sometimes also from dealers. Ask around. Check out the car, the dealer, and the auction site. Make sure you do your homework before you place a bid or buy the car. Remember to stay within your budget and understand the risks involved.