 | Jarod Stice is a Pittsburg State University graduate, and a licensed car dealer located at 1605 N Broadway in Pittsburg, KS (Stice Auto Sales, south end of TH Rogers Parking lot). He has been in the automotive business for nearly twenty years. Jarod has experience in retail automotive sales, new and used automotive parts and accessories, salvage automobile recycling, and is a licensed insurance agent. His background in all these fields combined, allows for extensive knowledge on any used car you may be considering. Stice Auto Sales: Providing clean and reliable low cost automobiles, through upfront pricing, honest presentations, and continued referrals from hundreds of satisfied customers that we call family.The Stices
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Cars, Trucks, Vans & Automotive
2013-06-25 09:28:39
What does it mean when a vehicle has a salvage title?
Q-A commonly asked question I get is, “What causes a salvage title? Doesn’t that mean a car is junk?”
A-No, in fact it doesn’t. In many states, cars that are Junk, or damaged beyond reasonable repair, are given a Junk title. They can never be put back on the road, no matter the repairs made. A salvage title, is a brand given by an insurance company, at their discretion, after a vehicle has had a “Total Loss.” This is the price point at which it is in the better interest for the insurance company to replace the vehicle rather than to have it repaired. The payment on the claim, whether it be with a monetary check, or an actual replacement vehicle, is processed, the vehicle is then claimed as property of the insurance company, and sold at a salvage auction.
The point of “Total Loss” is calculated by an array of variables, some far above my head, and others very basic. They include price of parts, price of labor, availability of parts, cost of a rental car during repairs, towing and storage bills, value of car-combining mileage, previous damage, and any added values. You can see how quickly things can add up against a car getting repaired.
I would venture to say, you or someone you know may have had a little fender bender in the last few years. Maybe this was a deer hit straight to the grille of your truck. How many people do you know that were surprised to hear their vehicle was totaled out after a collision, even though it may have appeared to be minor damage? What if that old truck just had a new motor or transmission put into it? Or, maybe had the front end rebuilt and a coolant flush? None of those things count as added value to a vehicle because they are typically considered maintenance, and don’t help in keeping your truck from being salvaged.
“Does a vehicle with a salvage title lose value?” Yes it does. Immediately after a car is given a salvage title, it does lose value on a dealer’s lot, and in all aspects of its life except its ability to provide transportation for you. If a 2005 Chevrolet 1500 Silverado worth $12,000 is wrecked, say we hit a deer, and the repairs are estimated at $4,000. If this vehicle is fixed by the insurance company and not given a salvage title, it loses no value. If it is however not immediately repaired, but given a salvage title, paid out as a total loss, sold at auction, repaired for only $2,000 cost and placed back on the market, it is now arguably worth less than the same truck repaired 3 months before, perhaps by the same shop that would have done the repairs the first time.
“Is there value in buying a salvage vehicle” Most certainly! I love salvage titles, where else can you save sometime 20-30% off the sticker price of a vehicle and not get a total lemon? If I am paying that much less for a car, just to acknowledge that it was damaged and repaired, I’ll happily take those savings up front. In the scenario above with our 2005 Chevrolet, if the repairs were made without giving the truck the salvage title, you would get the same truck with the same repairs and history, but maybe not be made aware that something had happened to the truck you are purchasing.
Please be aware, you will never get full retail out of your car after a salvage title, so you must buy it with that in mind. They are not always good cars to trade every 6 months, but they are great drivers to get you to and from, haul the kiddos around, even put the grandkids in for high school and try to make it last with them behind the wheel.
In closing, a salvage title is simply a “brand” or title that all insurance companies are required by law to place on a vehicle that has been claimed as a “total loss.” I have seen many houses that have had storm damage, say needed a roof, new siding, and 3 windows. This damage may have far exceeded the actual value of the home itself. Often we repair these homes, place them on the market and try to capitalize off of the damage and the repairs. We don’t simply claim these homes as salvage for asthetic damage, so why would we do the same for a car that can be repaired properly and put back to safe road conditions?
There are other things to know if you or someone you know ever has an insurance claim, and how to properly handle values of salvage titles, being able to owner retain your own vehicle if you don’t want to lose it, and also how to establish the value of your vehicle properly. We will cover all of these in future articles.
