App version: 0.1.0

Determining a Car’s Value With a Salvage Title

Does Car Value Change With a Salvage Title?
Austin Kilham
Austin KilhamUpdated November 20, 2022
Share this article:
Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.
You’re shopping for a used car and find one that looks great, has low mileage, yet is selling way below fair market value. Is there a catch? Possibly. You may discover that the car has a salvage title that’s dragging down the price. A salvage title means that the car has undergone extensive damage and was deemed a total loss at some point. While that doesn’t mean you should completely rule out the vehicle, it does mean you should proceed with caution and do some research before you cut a deal.If you’re thinking about buying (or selling) a car with a salvage title, here are some tips and guidelines to keep in mind, including how to value a salvage title car, and challenges you may face when you own a salvage car.

What Is a Salvage Title?

Your car title is the legal document that proves you're the owner of the car. Brand new cars start with what is known as a “clean” title. Over time, however, that can change. If the car is in an accident or otherwise sustains damage (perhaps due to a flood, fire, or hurricane) that renders it undriveable, it may receive a salvage title. A salvage title means the insurance company has deemed the car to be a “total loss,” meaning that it will cost close to or more money to repair than what the car is worth. The value percentage that triggers a total loss varies by state and insurer, but it's typically between 70% and 90% of the car's resale value. Once a car is declared a loss, the insurer will generally take possession of the vehicle and issue a salvage certificate. At that point, the car is not legal to drive and cannot be registered. Sometimes, in an effort to recoup some of the money they lost, the insurer will sell the car to an auto repair company, where it may get repaired or rebuilt. If the repaired vehicle passes inspection and is declared safe to drive, it can then receive a “rebuilt” title. You may purchase rebuilt title cars and register them in your name. You may see both salvage and rebuilt titles referred to as “branded” titles. A branded title indicates there's something unusual about the title.Keep in mind that a salvage title is different from a lemon car, which is a car that has a significant defect that the manufacturer can’t fix within a reasonable amount of time. 

How Can You Check if Your Car Has a Salvage Title?

Sellers and dealerships are required by law to disclose a vehicle’s salvage title. However, this law isn’t easy to enforce, particularly if the car crosses state lines before going on the market. As a result, it’s always wise to do some sleuthing about a car’s history before you consider buying it. Salvage titles usually display the word “salvage” across the title to distinguish them from a regular title. But if you don’t have access to the title, you can learn about the car’s history by visiting the National Motor Vehicle Title Information System website, VehicleHistory.gov, as well as other vehicle information websites, like Carfax. A quick visual inspection of the car can also provide clues. There are a number of red flags that can suggest a vehicle has a salvage history, including: 
  • Signs of a major repair to the inner fender structures
  • Mud, mold, or rust under the carpet in the trunk
  • Vehicle identification number (VIN) plate attached with materials other than rivets
  • Airbag system light is always on
  • National Highway Traffic Safety Administration (NHTSA) labels which usually appear on the doors, inside hood, tailgate, and hatchback are missing
Recommended: What to Do if You Lost Your Car Title 

Can You Get a Salvage Title Removed?

Once a vehicle’s title has been branded as salvage, it will generally never go back to the way it was titled before. In most states, however, a car with a salvage title can be rebranded as a “rebuilt title" (sometimes called “reconditioned” or “assembled”). To get the title change, you will need to repair the vehicle and submit it to the Department of Motor Vehicles (DMV) for inspection. If it passes, the DMV will rebrand the title as rebuilt.People, including dealers and car buyers who know about car titles, however, will be aware that a rebuilt title means the car was previously branded salvage. So, technically, the salvage branding can never be fully erased.

Determining the Value of a Car With a Salvage Title

While there is no standard formula that can give you the value of a salvaged car, it’s fairly simple to get a ballpark range of its market value.The first step is to establish the value of the car had it not been damaged. You can do this by looking it up on Kelley Blue Book, Edmunds, or the National Automobile Dealers or Association (NADA). These websites are easy to use and allow you to look up a car’s value based on its year, make, model, trim, mileage, and condition. In this case, you can simply use “good” condition to get a starting market value for your salvage calculation.Once you get the car’s market value in good condition, you’ll want to knock it down because of its salvage condition. Generally, if a car has not been repaired after a major accident, it will only be worth 10% to 50% of an equivalent used car’s value. If the car has been repaired and has a rebuilt title, it will likely receive about 70% of its undamaged value.Recommended: How to Increase the Value of Your Car 

Factors That Can Influence the Value of a Car With a Salvage Title

Salvage car values vary widely, however, due to a range of factors. These include:
  • Make and model Some car manufacturers have better reputations for durability than others, and some models are more popular than others – both can drive up price. This can also vary based on location. 
  • Mileage More mileage signals more overall wear and tear. Thus, a high-mileage vehicle is likely to sell for less than an identical car with half as many miles on the odometer.
  • Reason for the salvage title This can have a significant impact on the car’s value. A car that’s been in a flood, for example, will generally have less value that a car that’s had body damage due to an accident. A car can also get a salvage title if it was stolen and not recovered for many weeks or months, since the insurer considered it a total loss. This type of salvage car will typically have a much higher value than one that was totaled in an accident.
Recommended: 3 Ways to Increase the Value of Your Car

Challenges of Cars With Salvage Titles

Salvage title cars come with some risks and unknowns. Here are some you may want to consider.

Safety of the Vehicle

It can be hard to understand how much damage you’re dealing with when you consider a car with a salvage title. Even if the car has been repaired, it may have issues that were never properly addressed. And, if the rebuilder cut corners, it could have structural or alignment issues that could potentially make it less safe to drive.

Financing the Vehicle

Lenders tend to avoid the extra risk associated with salvage title cars, so it may not be easy to get a car loan to buy one, especially if the vehicle hasn’t been repaired yet. If you do find a lender, you may need excellent credit, and even then, interest rates may be high. 

Insuring the Vehicle

Salvage title vehicles can be difficult to insure, even when they’re rebuilt. Insurance companies may not offer insurance for rebuilt cars at all, and if they do, it will likely be limited. In many cases, they may only offer liability coverage, which will cover damage done by you to another property or people, but won’t cover your vehicle or injuries to you or your passengers.

Selling the Vehicle

If you buy a vehicle that has a salvage title, you’ll generally need to repair it and get it inspected before you can resell it. Even then, you may have trouble selling the car, since buyers will often be suspicious of a car that has a rebuilt title.

Can You Refinance a Car With a Salvage Title?

If you can find an auto loan for a salvage title car that has been rebuilt and deemed road-worthy, it may be possible to refinance that loan in the future. When you refinance a loan, you essentially take out a new loan, ideally with better rates and/or terms, and use it to pay off your original loan. You then only make payments on your new loan.  Refinancing might make sense if your initial salvage or rebuilt car loan came with a high interest rate, the monthly payments have become unmanageable, and/or your credit score has improved (qualifying you for a lower interest rate). However, It may be just as difficult, if not more so, to find a lender willing to offer a refinance loan than it was to find financing for the salvage vehicle in the first place. 

The Takeaway

A car with a salvage title can be significantly cheaper than a used car with a clean title. While it may be tempting to buy one, there are some precautionary measures you may want to take before you seal the deal. These include: calculating the car’s value, researching its history, and considering the challenges that can come hand-in-hand with a salvage vehicle, such as potential difficulty with financing, insuring, and reselling it in the future.

3 Auto Loan Refi Tips

  1. Refinancing your auto loan could lead to lower monthly car payments and more money in your budget. Lantern by SoFi can help you find the right auto refi loan for you.
  2. Shortening the term of your auto loan may increase your monthly payments, but you’ll likely pay less in interest over the life of the loan.
  3. Generally, the newer your car, the lower the refi interest rate. This is because younger cars typically have a higher value than old or used cars — and the car serves as collateral for the loan.

Frequently Asked Questions

What are salvage titles on cars?
Is the value of a car with a salvage title low?
How can you determine your car value with a salvage title?
Photo credit: iStock/ChiccoDodiFC
LCAU0822001

About the Author

Austin Kilham

Austin Kilham

Austin Kilham is a writer and journalist based in Los Angeles. He focuses on personal finance, retirement, business, and health care with an eye toward helping others understand complex topics.
Share this article: