Before you bid on your first salvage vehicle, you need to understand how salvage titles work. This guide covers what they mean, how they affect value, and the process of rebuilding a salvage car into a roadworthy vehicle.

What Makes a Car "Salvage"?

A vehicle receives a salvage title when an insurance company declares it a "total loss." This happens when the cost to repair the vehicle exceeds a certain percentage of its market value—typically 70-80%, though this threshold varies by state.

Common reasons for a total loss declaration include:

• Collision damage (most common)
• Flood or water damage
• Fire damage
• Theft recovery (often with stripped parts or vandalism)
• Hail damage
• Vandalism

It's important to note that "total loss" doesn't necessarily mean the car is destroyed. A $40,000 car with $25,000 in damage might be totaled on paper, but could still be very repairable—especially if you're doing the work yourself.

Title Brands Explained

Not all damaged car titles are the same. Here are the main types you'll encounter:

Salvage Title

A salvage title means the vehicle has been declared a total loss but hasn't been repaired. In most states, you cannot legally register or insure a salvage title vehicle for road use. It's considered "not roadworthy" until repairs are completed and inspected.

Rebuilt Title

After a salvage vehicle is repaired, it goes through a state inspection process. If it passes, the title is converted to "rebuilt" (some states use terms like "reconstructed" or "prior salvage"). A rebuilt title vehicle can be registered, insured, and driven on public roads.

Clean Title

A clean title means the vehicle has never been declared a total loss. You'll occasionally find clean title vehicles at salvage auctions—these might be repos, donated cars, or vehicles with minor damage that didn't trigger a total loss. Clean title salvage finds can be great deals.

Other Title Brands

• Flood: Specifically branded for water damage—avoid these
• Fire: Burned vehicle—usually not worth repairing
• Junk: Meant only for parts, cannot be rebuilt in most states
• Lemon: Bought back under lemon law—may have persistent issues

How Salvage Titles Affect Value

This is the big question for anyone buying salvage: what's the car worth after you fix it?

Unfortunately, a rebuilt title permanently reduces a vehicle's market value. Even if you make perfect repairs, the title history follows the car forever. Here's what to expect:

• Rebuilt title: Typically worth 60-70% of clean title value
• Salvage title: Worth 40-60% of clean title value (mainly to buyers who will rebuild it)

This value reduction exists because:

• Buyers are wary of unknown repair quality
• Financing is harder to obtain (most banks won't finance rebuilt titles)
• Some insurance companies limit coverage options
• Trade-in values at dealerships are significantly lower

The Rebuilt Title Process

After repairing a salvage vehicle, you'll need to go through your state's rebuilt title process. This typically involves:

1. Repair Documentation

Keep all receipts for parts and repairs. Many states require proof that you used legitimate parts (not stolen) and may verify VINs on major components like engines and body panels.

2. State Inspection

Most states require a physical inspection by a state-certified inspector or law enforcement. They'll verify:

• The vehicle is safe to operate
• All VINs match documentation
• Parts aren't from stolen vehicles
• Repairs meet safety standards

Some states (like Ohio and New Jersey) are known for more rigorous inspections. Others are relatively easy to pass.

3. Title Application

After passing inspection, you submit paperwork to your state's DMV for the rebuilt title. Processing time varies from same-day to several weeks depending on the state.

Insurance Considerations

Before buying a salvage vehicle, understand how insurance works:

• Liability coverage: Generally available from most insurers
• Comprehensive/Collision: Some insurers won't offer this on rebuilt titles; others will at higher rates
• Claim payouts: If your rebuilt title car is totaled later, the payout will be based on rebuilt title value, not clean title value

Shop around—State Farm, Progressive, and GEICO typically offer full coverage on rebuilt titles, though rates and requirements vary.

Is Buying Salvage Worth It?

Salvage vehicles can be excellent deals for the right buyer. You're a good candidate if:

• You have mechanical skills or access to affordable repair services
• You plan to keep the car long-term (resale value matters less)
• You can pay cash (financing is difficult)
• You can accurately assess damage before bidding

Use our salvage calculator to see if the numbers work before you bid. Factor in the reduced resale value when calculating your maximum bid.