Perhaps you are car hunting and come across the term "salvaged car." Perhaps you also have heard warnings about buying one. So, what is a salvaged car and hat is important about them? This following is what you need to know to help protect yourself.

Definition

A salvaged car is any vehicle that has been damaged beyond the value of the car--meaning it would cost more to repair than the car is worth. Cars involved in major accidents or damaged in a flood are often considered salvaged or '"junk" cars.

The Process

The important thing to realize is that every car you see for sale might not be such a great deal; if the price is too good to be true, it may very well be. Say the vehicle was involved in a head-on collision on the freeway. The insured makes a claim and is reimbursed by the insurance company, who then sells it to a wrecking yard or other party. The state vehicle registration agency then declares the car "totaled." A new title, called a "salvage" or "junk" title, is issued.

The Problem

Titles labeled salvaged or junk are meant to warn future buyers that the vehicle was once "totalled." The problem is, if the buyer is unaware of exactly what they are buying, they may have just obtained a headache instead of a great deal. Salvaged cars can sometimes be pieced together with two cars made into one, or repaired sloppily to keep profit margins high. What you buy might look just fine, but may never hold an alignment, drive sluggishly, handle poorly or break down often. Another salvaged car trick is when shady dealers switch VIN numbers to make the car they sell appear "clean." When this happens, the car is actually junk but has a clean VIN. The new owner may never become aware of the problem until the car breaks down or police inform them it is stolen.

Another Consideration

Additionally, salvaged cars that appear to be a financial deal may not be. Beyond the cost of repairs you might need to make, some insurance companies will not insure salvaged cars. Finance companies also may not loan money on them.

Do your Homework

The best way to protect yourself is to do your homework. There are several ways to go about this. 1) Perform a CarFax report check. CarFax can report accident and frame damage records; check titles for salvage, junk, and flood information; inform you of the number of previous owners; disclose service records; and more. 2) Determine why the car has a salvage title. How the car was damaged is often included in police reports and can prove invaluable information. 3) Inspect the car for obvious signs of damage or repair. Many auto repair shops can perform this service at a small cost. 4) Consider taking the car to a reputable auto body shop, especially one that specializes in frame repairs. They can easily and accurately assess damage and quality. 5) Perform a search on the unofficial DMV site listed below. It can report individual state's salvage laws and more. 6) After compiling the facts, make your decision about the value versus the cost. You may decided that the "bargain" will cost more than you will save.

Source:

Salvaged Cars

Avoiding Problems with Salvaged Vehicles

Buying a Car with a Salvage Title

Resource:

Before You Buy a Car

Unofficial DMV guide

Car Fax