Should I buy a car that was totaled?

When you’re looking to buy a new car or truck, stumbling upon a vehicle with great mileage and a nice exterior priced under market value can feel like a lucky break. But could there be a catch? 

If you’re considering buying a car that was totaled, there is often a lot more to consider than the selling price. From finding an insurer that will cover a salvage title vehicle to financing challenges and safety concerns related to the vehicle’s history, buying a once-totaled vehicle can be tedious — and risky — for car buyers. In some cases, it can even be a wasted investment.

Read on to learn more about what a totaled car is, how buying a salvage title vehicle differs from purchasing a new or used car or truck, and why it’s important to weigh the pros and cons before investing in a car that was totaled.

What does it mean when a car is totaled?

A car is considered “totaled” when its repair costs after an accident exceed the vehicle’s actual cash value (ACV) according to the insurer’s criteria and state law. 

When a vehicle is declared a total loss, the insurer will typically reimburse the owner for the car’s value rather than covering the higher cost of repairs. After a vehicle is determined to be totaled, it is usually assigned what is known as a salvage title.

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption

How does insurance value your car?

If you total your car, does insurance pay for it? Although your insurance company won’t pay to repair a totaled vehicle, they will typically offer to reimburse you for the actual cash value of your vehicle. 

However, determining how insurance companies value totaled cars is more complicated. Car values often vary between insurers, but the process for valuing a vehicle remains relatively consistent across providers. 

For example, when a claims adjuster assesses the damage to your vehicle after an accident, they take into account the car’s mileage, age, and history of previous accidents and damage before consulting the Kelley Blue Book to determine its value. Check out our Totaled Car Value Calculator for more information.

What is the “book value” of a vehicle?

“Book value” refers to a vehicle’s market value. The term comes from book listings, like Kelley Blue Book, which closely tracks the automotive market and the amount that every make and model currently sells for. The actual cash value of a vehicle at any given time is its “book value.”

Salvage Title vs. Revived Salvage Title

Although totaled vehicles that are later restored to roadworthiness are often referred to as “salvage vehicles,” you should be aware of the important differences between salvage titles and restored or revived titles:

• Salvage title. Refers to a vehicle that is currently considered by an insurer or vehicle owner to be unsuitable and likely unsafe to drive. Salvage title vehicles cannot legally be driven or insured.
• Revived salvage title. Refers to a vehicle that has been totaled but restored to good condition. When a vehicle has been assigned a revived or restored salvage title, it has been determined safe to drive on roads and highways. 

Unlike salvage vehicles, revived salvage titles can also be legally insured. However, insurance coverage for vehicles with a salvage history is often limited, even when restored.

Pros and Cons of Buying a Total Loss Vehicle

Due to the disadvantages associated with a history of extensive damage, buying a vehicle that has been totaled isn’t advisable for most drivers. However, purchasing a vehicle with a salvage history can benefit some people under certain circumstances.

Some of the advantages of buying a vehicle that has been totaled include the following:

• Lower purchasing price. Totaled vehicles are often sold for less than the market value of identical makes and models without a salvage history because of the extensive damage they sustained.
• A source of spare parts. Mechanics, car enthusiasts, and drivers who own multiple cars could benefit from having a vehicle on hand for spare parts or scrap metal.
• A fun project. Restoring a totaled vehicle to good condition can be a fun project for mechanically-inclined people.
• Discovering a “diamond in the rough.” Although it’s less common, finding vehicles with a salvage history that aren’t in terrible shape once repaired is a possibility. For example, a recovered stolen vehicle might have never been involved in an accident before being declared a total loss. Additionally, an older vehicle might have been declared a total loss after sustaining cosmetic damage due to the difference between its low ACV and the cost of repairs.

The disadvantages of buying a car that has been totaled include the following:

• Safety issues. Revived salvage titles can still have safety issues despite being deemed roadworthy. It’s often difficult to know the extent of the damages that led to the car being declared a total loss after the fact, and the quality of repair work is often difficult to assess. Buyers should be especially cautious about vehicles that have been damaged in floods since water damage can take months or years to become fully apparent.
• Financing challenges. Banks and credit lenders often view vehicles with a salvage history as high-risk, making them more difficult to get a loan.
• Limited insurance coverage. Insurance companies are generally hesitant to offer full coverage to vehicles with a salvage history. Coverage options for cars that have been totaled are often limited to liability-only policies.
• Difficult to sell. Cars that have been totaled are sometimes difficult to resell due to their history and associated challenges.
• The potential for fraud. Dishonest sellers can easily take advantage of the opportunity to sell a used vehicle with a restored salvage title as-is. And because information about past damage can be difficult to confirm, buyers often have no legal recourse when suing sellers without evidence that they were deliberately misled.

Despite the benefits, vehicles with a salvage history come with serious risks that every car buyer should be aware of before making a purchase. 

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption

Buying a Vehicle That was Totaled

If you’ve weighed the advantages and disadvantages and decided that you still want to buy a car that was totaled, ensure your new investment is safe with the following tips:

• Obtain a vehicle history report. Use a service like Carfax or AutoCheck to pull the vehicle’s history using its vehicle identification number (VIN). Look out for red flags like a car being towed from the scene of an accident or air bags being deployed.
• Run the VIN through national databases. Although there are no guarantees when buying a vehicle with a revived salvage title, using databases like the National Motor Vehicle Title Information System can help avoid fraudulent titles.
• Ask a mechanic to perform a full vehicle inspection. Instead of relying on the seller’s word about the vehicle’s condition, have a trusted mechanic perform a full inspection of the vehicle to check for any serious issues, including frame damage.
• Ask the seller for detailed records and information. Ask the seller detailed questions about the vehicle’s past damage. Review photos of the damage before repairs and ask for the vehicle’s repair records. You can also contact the body shop that repaired the vehicle and speak with the mechanic who worked on it.
• Examine the title. Determine how long ago the revived salvage title was issued. The repairs might have been sufficient if the revived title had been assigned years ago and the car had been driven regularly. However, repairs associated with a recently-issued revived title might be more difficult to assess. Either way, consult a qualified mechanic before making a decision.
• Take the vehicle for a test drive. Take the car out for a spin to ensure it drives well and that you’re comfortable with its current condition. Test every button and knob to ensure they work, assess the alignment, and check the brakes.
• Know your local laws. Inspection requirements and regulations about damage to totaled vehicles vary from state to state. Take time to understand local laws and title requirements before buying a vehicle with a salvage history.
• Talk to an insurance agent. Auto insurance for salvage vehicles is often limited. Insurers aren’t willing to insure vehicles with a salvage history. Contact an insurance agent to ensure the vehicle is insurable before buying it.
• Be prepared to be the vehicle’s last owner. Due to challenges with financing and insuring a car that has been totaled, selling a vehicle with a salvage history isn’t easy. If you buy a revived salvage title vehicle, understand that you might be stuck with it.

How to Finance a Car That Was Totaled

It can be challenging to find a loan to buy a car that was totaled because banks and lenders often view vehicles with a salvage history as high-risk. 

Although getting approved for an auto loan depends on a number of factors, qualified buyers with good credit and a history of on-time payments might consider applying for an unsecured personal loan to help pay for their vehicle. Loan features can vary by lender, so make sure to compare interest rates and other requirements before applying.

How to Insure a Vehicle with a Salvage History

Insurance companies are generally hesitant to fully insure vehicles with a salvage history due to the possibility of extensive damage and safety issues. Because of that, insurance for vehicles that have been totaled is often limited to liability auto insurance coverage. In some situations, insurance companies might refuse to insure a vehicle with a salvage history.

Before buying a total loss vehicle, consider getting a pre-purchase insurance quote to find out how much you can expect to pay for insurance — and whether the vehicle you’re considering buying is insurable.

It’s also important to remember that insurance rates are sometimes higher for vehicles with a salvage history due to their history, so the quotes you receive could exceed the average rate for insurance coverage in your state.

Because rates and policy options vary, shop around and compare quotes to ensure you get the best rates and insurance coverage available.

Buying a New Car After a Total Loss

After totaling your vehicle, you have options to make buying a new car easier, including asking your insurer for a higher payout. 

For example, after your vehicle has been declared a total loss and you’ve received an offer from the claims adjuster, you can try to negotiate a higher payout if the insurer’s estimated value seems too low. This can help you obtain more money to put down on a new car or truck after your vehicle is totaled.

Learn how to set up insurance for a new car after yours is declared a total loss.

Buying a Vehicle That was Totaled: The Lowdown

Buying a vehicle that has been totaled is a risky move that isn’t recommended for most car buyers. Although purchasing a car or truck with a salvage history can have benefits under certain conditions, the advantages don’t outweigh the risks in most cases. 

Even if the car has been restored, it’s important to fully understand the risks and responsibilities associated with buying a vehicle that has been declared a total loss before making a purchase.

Free Auto Insurance Comparison

Enter your ZIP code below to view companies that have cheap auto insurance rates.

 Secured with SHA-256 Encryption