Purchasing a vehicle with salvage titles presents several problems, including difficulty securing financing, few insurance coverage options, lower resale value, and variations among state regulations which often cause confusion. When searching for cars, many people consider purchasing vehicles with salvage titles because of their low cost, however, cars with salvage titles vary widely in physical condition and overall value. Some vehicles have minimal structural and aesthetic damage, making them good investments, while others prove financially burdensome and even pose safety risks.
The condition of salvage vehicles plays a large role in determining the number of problems new car owners might encounter. Most people considering a salvage title car should prepare to pay up front, in cash. Many lenders hesitate to give out loans for salvage vehicles, due to questions regarding the car's value. As states vary widely in their criteria for owning and inspecting salvage title cars, those purchasing salvage cars, especially for the first time, may encounter hidden fees and substantial inspection requirements.
Many auto insurance providers also charge higher fees for people purchasing salvage title cars or deny coverage altogether, citing safety and reliability concerns. Even upon securing insurance coverage, people looking at salvage cars should consider that in the event of future accidents, insurance companies might pay only marginal amounts for claims.