How to Sell a Salvage Car

You might think that “it is not lawful to sell a salvage car,” but it is. Selling damaged cars is legal, but you need to know the rules. It can be tricky and time-consuming. Also, do not try to rush to earn money and get into legal trouble.

Usually, you begin by checking the requirements in your state. Some states have stricter laws. But generally, you just have to disclose that the car has a salvage title. Every state requires a seller to disclose this information, otherwise, it is criminal and can lead to a fine.

How to Sell a Salvage Car

Don’t panic, even knowledgeable buyers do not. A buyer knows what they want and will pay for it. The downside is that you may sell the salvage vehicle for a lot less than its value. That said, follow these few steps to sell a salvage car:

1. Check if the Car is Really a Total Loss

A totaled car means it would cost the insurance company more to fix it than the car is worth. Insurance companies are more concerned about numbers, so if they determine that it is not economical to repair the car, they simply total it.

2. Obtain a Salvage Certificate

After your insurance company declares your car a write-off, you can contact the DMV to notify them of the salvage state. In many states, it is the insurance company’s responsibility to report the salvage car to the DMV (Department of Motor Vehicles) or the relevant title agency. At the DMV, you can request a salvage title. So, this makes your old title invalid. So, anyone who owns it might only get basic insurance, and if they want collision or comprehensive coverage, it could be expensive or not even available. This means that any warranties your car had before the accident won’t work anymore.

3. Repair and Get a Rebuilt Title for the Car

After you get a salvage vehicle, you might want to think about fixing it. It is tougher to sell a salvage car. When you find a buyer, they will underprice and consistently remind you that the vehicle is salvage and belongs to the junkyard. That’s not true; it’s the smart buyer’s trick to get you to settle for less.

But you can improve the value of the car by changing the salvage title to a rebuilt title. Sometimes, people go the extra length of turning a rebuilt title into a clean title.

You can rebuild a salvage car yourself to cut costs if you are handy and good with cars. Otherwise, you have to hire a mechanic to help. A rebuilt salvage car is worth more than one with a salvage title.

But remember, each state has its own rules for fixing damaged salvage cars. You need to follow these rules to get the car retitled as a rebuilt one. So, check the guidelines for your situation before you start fixing the car. Some states may require you to only have licensed rebuilders work on the vehicle before you can obtain a branded title known as a rebuilt title or rebuilt salvage title.

4. Sell the Vehicle

Now that you have a rebuilt title, you can sell the car easily, compared to selling with a salvage title. The easiest way is to visit a dealership, tell them it is a salvaged car, and sell it to them for cash. Dealers often buy salvage cars, fix them, and auction them.

You can also auction the car yourself as a private seller on Craigslist. Another option is selling it to a private buyer, but because insurance can cost more for salvage cars, be prepared for some negotiation.

If you cannot repair or sell a salvage car, you can give it to a scrapyard or donate it to a charity and get a tax credit. Usually, they will pick up the car for free.

The asking price should reflect the car’s salvage title status. List the car at about 80% of its Kelley Blue Book value or check similar salvage title car listings on Craigslist for pricing guidance.

Disclose upfront in your advertisements and communications that the car has been rebuilt. If the vehicle was salvaged due to an accident, this should be clearly communicated to potential buyers. The rebuilt title will indicate the date and mileage when you acquired the car, and if the car has been reliable since its rebuilding, you can confidently state that to prospective buyers.

How Does a Car Become Salvage?

A car can get a salvage title not just from crashes but for other reasons too. If a stolen car is not found quickly, it gets a salvage title when the insurance company gives up. Later, if it is found, the DMV labels it as salvage, no matter its condition. In many states, you can fix it and make it legal again, but it might be tough and expensive.

Natural disasters and bad weather can often damage cars so much that they’re given a salvage title. Things like smoke, hail, floods, and even strong winds can make fixing the car more expensive than its value to the insurance company.

Sometimes, an old car in really bad shape because of rust and wear from being outside for years cannot pass a state inspection. If fixing it is too costly and not worth it, they might label it as salvage. Meanwhile, I recently talked about some states where you might accidentally buy rusty cars.

Effect of Salvage Title on Car Value

If a car has a salvage title, you can make it roadworthy again if you fix it to pass safety inspections at the DMV for a new title. But these fixes can cost a lot, and there is no sure thing that it will meet all the state’s inspection rules even after fixing it up. Therefore, a salvage title has a bad effect on a car’s value.

Even if you get a new title, the old salvage title stays on the car’s history report forever. That is why it is smart to check a used car’s history report before buying it. It can be hard to find a buyer who is okay with a car that has had a salvage title before. Moreover, many dealers will not take these cars as trade-ins.

A salvage car might have safety problems from damage, so getting insurance can also be tricky. If an insurance company does cover it, the rates might be really expensive. A potential buyer is aware of this concern and will try to haggle over the value of the car. Sometimes, you might be forced to undervalue the vehicle, even beyond the actual status of the damage.

Conclusion

If you’re good at fixing cars and enjoy it, you could make money fixing up a salvage car. But if you’re not good with repairs, it might be better to take the insurance money and move on. It’s your choice. Just be sure to know the rules if you plan to sell a salvage car.