What is a salvage title? What Buyers Should Know About Flood Damaged Cars

(iSeeCars) – A car title is a legal document that proves you own a vehicle, much like a title deed. Every vehicle sold in the United States comes with a title, and while the exact information on the document varies by state, car titles always include the VIN and year, make, and model of a vehicle as well as the reading of its odometer. Whether you buy a new or used car from a dealership or a private seller, you will receive a car title.

In addition to showing proof of ownership, a car title also lets you know if a vehicle is damaged or defective. If you’re shopping for a used car, you may come across a vehicle with a salvage title that indicates water damage. And with peak hurricane season approaching, thousands of flood-damaged cars will likely hit the market in the coming months. What does this mean and should you avoid salvage titles and flood damaged vehicles? We have the answers.

Vehicle salvage title: what it means

There are two categories of securities: proprietary and branded. A clean title means a vehicle has a clean record, while a trademark title means a vehicle has suffered severe damage that needs to be disclosed. The most common trademark title is a salvage title. (For more examples of brand vehiclessee our handy guide.)

If a car has a salvage title, it means the vehicle has suffered significant damage and has been deemed a total loss by an insurance company. This most likely means that the vehicle has been in a major accident and the cost to repair the vehicle exceeds its value. In this case, the insurance company will pay a damaged vehicle claim for the value of the car to its owner and take possession of the vehicle. Or, it could mean that the car has been the victim of a severe weather event, such as a hurricane, flood, or hailstorm.

After the car is towed to an impound lot owned by the insurance company, it is sent to an auction house that specializes in cars that have suffered untimely demise. The car is most often bought by a junkyard and its parts are used for scrap or to repair other vehicles. Or, if the damage isn’t too extensive, a body shop can repair and resurrect the car. If the car once recovered passes the inspection, it will be resold with a rebuilt title. (Check out our What is a reconstructed title guide to learn more.) Finally, a dealer may choose to sell the car as-is in the hope that it will attract a buyer who is willing and able to repair it.

How does a car become a salvage vehicle?

Salvage title laws vary from state to state. For example, what one state defines as a rescue vehicle may be different in another state. However, in most states, a salvage title includes a vehicle in one of the following categories.

  • The vehicle has collision damage.
  • The vehicle was damaged by flooding. Some states will specifically list flood damage on a vehicle’s title, while others will classify flood damage as a salvage title.
  • The vehicle was damaged by fire.
  • The vehicle suffered significant damage as a result of a storm such as hail or a tornado.
  • The car was stolen and recovered after the insurance company declared it a total loss.

In New York State, a vehicle must be marked as a salvage if it is eight model years or newer and the vehicle was destroyed or damaged for 75% or more of its value at the time of damage.

In Florida, a vehicle must be labeled as salvaged if an insurance company declares it a total loss. However, the percentage of total loss classification varies. This can be the case if repair costs total as little as 50% or as much as 95% of a vehicle’s value.

In most states, it is illegal to drive salvage title cars on public roads. To learn more about what is considered a rescue vehicle in your state, check with your local Department of Motor Vehicles (DMV).

Dangers of Flood Damaged Vehicles

Vehicles are built to get wet, but they are not designed to be flooded. A flooded car was likely submerged in several inches to several feet of water. Being flooded like this can wreak havoc on a car, causing anything from glitchy electronics to wrecked engines, depending on how much water got into the car.

Cars deemed flood-damaged are bought back by the insurance company and sent to the auction, where they are usually sent to the crusher. But sometimes people try to fix and return a flooded car. Just like cars with salvage titles, cars with flood titles are best avoided.

Beware of Title Washing

Since states have different regulations on what constitutes a salvage car, moving the car to a state with more lenient laws may result in the brand being removed from the title. Since titles are issued by the state RMV, a vehicle will get a new title if it is sold in another state.

A title can also be renamed by physically modifying it. Some title wash systems involve a seller making physical changes to the paper document that remove any evidence of branding.

Title washing is a federal crime and can result in hefty fines or even jail time.

Should You Buy a Salvage Title Car?

Purchasing a salvage title car involves many risks. Here’s what you should pay attention to.

  • Security risks: The main disadvantage of buying a salvage title car is the inherent security risk. Since these cars suffered significant damage, it is possible that they were not properly repaired. Even if the car was completely rebuilt and passed an inspection, it may not have been repaired well. There are safety risks that an inspection cannot determine, such as whether the airbags deploy in the event of an accident.
  • Fraud risk: Salvage car sellers will likely claim the damage was minor as they will be desperate to make a sale. Salvage titles are sold as is, so there is no warranty protection when purchasing a salvage vehicle.
  • Difficult to insure and finance: Some insurance companies will not provide cover for salvage vehicles, while other insurers will only provide limited cover at a high premium. Many banks and lenders will also not provide auto loans for salvage vehicles.
  • Low resale value: When the time comes for you to sell or trade in the vehicle, it will have a low resale value. Some dealerships don’t buy salvage cars, so you might have a hard time getting rid of them.

In certain circumstances, there may be advantages for car buyers when purchasing a salvaged vehicle.

  • Significant savings: You might come across a vehicle that has only suffered cosmetic damage, such as a hailstorm. As a result, it will be significantly reduced.
  • If you are a mechanic: If you have the ability to repair a car, buying a salvage title car does not carry the same risks. You can either use the parts to repair other cars or repair the car to make it operational again.

How to tell if a car has a salvage title

Before buying a used car, it is important to obtain a vehicle history report such as Carfax or Autocheck and perform a VIN check. The iSeeCars Verification of VIN The report provides comprehensive analysis that includes up to 200 data points to help answer all the questions buyers should ask before purchasing a used vehicle.

iSeeCars VIN check provides title information based on DMV status. It will tell you if the vehicle has a clean title or if it has a salvage title or another type of trademark title.

The full report will be linked to CarFax and AutoCheck vehicle history reports, and in many cases they will be free. The vehicle history report will provide detailed information about the vehicle title. For example, if a salvage certificate was issued after an accident, the vehicle history report will provide details about the accident and where the vehicle suffered damage.

If the price of a used car seems too good to be true, you should do your research to see if it’s because it has a salvage title. It is important to know this information early in the process before becoming too attached to the vehicle.

The essential

Buying a car with a checkered past as a salvage title comes with a lot of risk. Although a rescue vehicle may seem like a good deal, the potential safety risks likely outweigh the savings. Additional insurance costs and lack of financing options also hurt the initial cost of the car. There may occasionally be a diamond in the rough that has been properly repaired or only suffered minor damage, but flood damaged cars should be avoided at all costs. While it’s important to have every used car inspected by a trusted mechanic before buying it, this is especially important if you’re considering buying a salvage car. A mechanic may pay close attention to areas of the vehicle that have been damaged to see if they have been properly repaired.

More on iSeeCars.com:

If you’re ready to take to the web for your own car buying process, you can search over 4 million new and used cars with iSeeCars’ award-winning system. car search engine which helps shoppers find the best car deals by providing key information and valuable resources, like iSeeCars Verification of VIN report. You can also filter by title, making sure the cars you find have proper titles.

This article, What is a Salvage Title or Flood Damaged Car? Originally appeared on iSeeCars.com

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