What Is a Salvage Title?

A salvage title is one of the most consequential things you'll see on a Carfax. Here's what it means, what causes it, and when (if ever) a salvage car is worth buying.

Definition

A salvage title is issued when an insurance company declares a vehicle a total loss. "Total loss" means the repair cost exceeds a percentage of the pre-loss value. The exact percentage varies by state, usually 60 to 80 percent.

What causes it

• Collision damage above the state threshold
• Flood damage
• Fire damage
• Theft recovery where the vehicle was stripped
• Hail damage above threshold (common in Texas and the Midwest)

Resale value

Salvage-titled cars sell for 20 to 40 percent less than clean-title equivalents. The exact discount depends on the model, the damage extent, and whether the brand is "salvage" (totaled, not yet rebuilt) or "rebuilt salvage" (totaled, repaired, state-inspected).

Insurance

Most insurers will give you liability only. They won't touch comprehensive or collision, meaning if you crash it, you can't claim the vehicle itself. Some states require a state inspection before you can get insurance at all.

Financing

Most banks won't lend on a salvage title. Specialty lenders will, at higher rates. Plan to pay cash.

When salvage might make sense

Four conditions: the discount is 40 percent or more, you've seen the damage report, you're keeping the car for its lifespan, and you're paying cash. Otherwise walk.

A cheap Carfax report reveals salvage history even when the title has been washed through another state. $9.99 to know.