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Before You Shop, Know The Risks In Buying Salvage Vehicles

By Niko - October 25th, 2012 08:01 AM

Buying a salvage title car can be a great investment, but there are risks in buying salvage vehicles. Before you buy, carefully consider the car's value, safety features and insurability. These factors will determine whether the salvage title car is a good investment or just another junker.

No “Blue Book” Value

One of the risks in buying salvage vehicles is that they are difficult to value. The Kelley “Blue Book” is the bible for automobile value listings, but it won't help you determine the value of a salvage title vehicle. In general, you can assume that the average salvaged vehicle is worth about half as much as if it were not salvaged. Use that estimation to gauge if you are getting a fair price.

Lack Key Safety Features

Seat belt pretensioners and air bags save lives, but you may not find these key safety features in vehicles with salvage titles. Before investing, have the brand dealer diagnose the air bag system and check the seat belts to reduce your chances of injury in the event of a collision.

Insurance Difficulties

Call your insurance company before you sign on the dotted line. Many insurance carriers will not insure salvage titles vehicles with collision or comprehensive coverage because determining the value of the vehicle is so difficult. Most states require vehicles to have minimum liability insurance, but getting even that coverage can be a struggle. Before you invest in an uninsurable vehicle, research the insurance regulations in your state and do your homework by contacting a few different insurance companies.

Obtaining Financing

Most banks won't finance salvage title vehicles, but some may offer a loan with special conditions. For instance, your loan may have shorter terms or a strict loan to value (LTV) ratio that means a higher down payment.

Registering Your Vehicle

Registering your salvage title car can also be a challenge. All states require registration, and cars must pass an inspection proving they can safely be taken on the road. Before you buy, research the registration process in your state to determine if your salvage title car can pass the inspection.

Have you invested in a salvage title vehicle? How did you deal with the risks in buying salvaged vehicles? Share your tips with us in the comment section below!

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