The potential pitfalls of purchasing a salvaged car are that the car may be unsafe to drive, have no warranty or a poor resale value, and be difficult to insure. Salvaged labels can indicate the car was involved in a fire or flood, which can lead to unseen damage.
The damage on a salvaged vehicle can be hard to detect, and without an assessment by a mechanic, a buyer may end up paying more in repairs than the vehicle is worth. In some states, vehicles involved in fires and floods are listed as salvaged and have costly repairs that can lead to long-term operating problems if neglected. Purchasing insurance for a salvaged vehicle varies by state, but it is often limited to liability insurance. Even with comprehensive insurance, insurers seldom pay out more than 80 percent of the listed value for a salvaged vehicle. Warranties are not offered with salvaged vehicle purchases, and the vehicle’s original warranty is voided after the car is declared a total loss.
The resale value of a salvaged vehicle is a potential pitfall because the salvaged title stays with the car’s history, which lowers the asking price even if the car is completely restored. It is considered fraud to sell a salvaged vehicle without disclosing information about its junk title. Some dealerships do not accept salvaged vehicles as trade-ins, which limits the owner’s options when purchasing a new car.