Debunking Salvage Car Myths: Why Buying a Salvage Car is a Great Decision
Last edit: March 22 2024 • 322 view
Reading time: 10 minutes
TL/DR
Salvage cars often come with many myths and misconceptions. Contrary to popular belief, salvage cars can be excellent purchases, offering high-quality vehicles at significantly reduced prices. You can buy salvage cars with minor or no damage, register them without issues, insure them with full coverage, and even finance them. Additionally, salvage cars are easy to sell, as you compete mainly on price. However, it’s crucial to do thorough inspections before buying to ensure the car meets your standards.
Salvage cars negative narrative
Very often when I talk to someone who never dealt with salvage cars I hear negative feedbacks. I sorted it out to the next claims.
It is difficult to fix salvage cars!
I cannot register salvage cars at DMV!
No one issues insurance for salvage cars!
You cannot finance salvage cars!
Selling salvage car is difficult!
Unfortunately, salvage cars have gotten a bad name because of some unscrupulous individuals. Used car dealers and banks FALSELY CLAIM that these cars are BAD and advise you to avoid them! They are only ‘bad’ in their eyes because they lose your business and your hard-earned cash.
Car flippers who deal with salvage cars have added to this negative narrative. They buy heavily damaged cars, fix them improperly, and sell them quickly for easy profit. Buyers who end up with poorly repaired cars spread negative feedback to their friends and relatives, saying things like, “Oh, this salvage car is a piece of junk,” or “Never buy salvage cars, they fall apart.”
I am here to bust these myths. If you follow my mini-course or join my Autohacker community (you can find the link at the bottom of this blog), you will discover that not all salvage cars are bad. Many have no damage or very minor damage, and the savings you can get with these cars are phenomenal. There are no issues registering, insuring, or financing them.
I’ve been doing this for over 20 years, and let me assure you, you can find amazing deals at salvage auto auctions and potentially save up to 50% on your purchase. Let me show you how!
Why salvage auto auctions?!
I love salvage auto auctions. They are a unique marketplace where you can purchase cars with minor or no damage at a significant discount. This is the only place on Earth where such deals are possible. Additionally, the variety is impressive. Weekly insurance auctions add over 300,000 cars to the inventory. While the majority of these cars have heavy damage, there are always gems to be found with clean titles and minor or no damage at all. It’s a treasure trove for savvy buyers looking to get the most value for their money.
How cars end up at salvage auto auctions?
The process is pretty straight forward and shown in the following diagram:
When a car is involved in an accident, the insurance company conducts a repair estimate. If the cost of repairs exceeds 50% of the car’s retail value (the percentage may vary by state; I take the average), they decide it is not worth repairing and declare it a salvage vehicle. They file a salvage disposition with the NMVTIS (National Motor Vehicle Title Information System) and send the car to salvage auto auctions to sell it as quickly as possible.
Reasons to buy salvage cars
There are generally three types of customers that I see at CARS4.BID:
- Customer 1: This customer is looking for a daily driver as cheap as possible. They have cash on hand and are ready to buy a salvage car to save 50% on the cost.
- Customer 2: This is a car flipper. They buy cars with the intent to sell them. I’ve done this myself many years ago, although I call it ‘Lifestyle Car Flipping.’ I purchased cars with the intent to enjoy driving them for a few months while simultaneously preparing to sell them. This strategy worked well for me, and I was able to flip over 500 cars in my career. If you want to learn more, check out my Lifestyle Car Flipping course.
- Customer 3: This customer is looking for a car or truck for their business. This could be for a construction business, moving furniture business, or even for those looking to use the vehicle for Uber or Turo (note: you would need a clean title for this).
Which one are you? It’s perfectly okay to fit into just one of these categories, or even two or all three.
Let’s bust the salvage cars myths
Myth 1: It is difficult to fix salvage cars!
While there are many heavily damaged cars at salvage auto auctions, there are also numerous cars with minor or no damage at all. I’ve been dealing with salvage cars for over 20 years, even though I have no mechanical experience. Let me show you an example of a recent car I had and the damages it had. You can then tell me if you think you could do the same repairs.
The car in question was a 2016 Dodge Charger. I purchased it in August 2019 for $20,000 from Copart. It was declared a salvage car due to theft recovery and did have some damages. Great looking car it was, indeed!
Dead battery
When I picked up the car, the battery was dead. I had to drive to the nearest AutoZone and buy a new battery. Do you think you could do this repair? I’m sure you can.
Maintenance
Whenever I pick up a car from the auction, I replace the oil and filters and conduct a 100+ point inspection. I called the nearest mechanic and oil shop, and within minutes my car was being worked on and checked. Could you do this repair? I’m sure you can.
New windshield
The car also had a broken windshield from thieves who tried to remove the VIN etched under the windshield. I searched for windshield replacement options online and within 20 minutes had two companies ready to replace the windshield for $350. Could you handle this repair? I’m sure you can.
New tires
The Dodge Charger had bad tires. Since I picked it up in Atlanta, GA and was planning to drive to Madison, WI, where I used to live, I decided to replace all four tires. While having breakfast, I called a few tire shops in the area and found four tires at a great price. Could you do this repair? I’m sure you can.
Those are all the repairs I did on this Dodge Charger. I bet they’re not difficult at all, even in one of the worst-case scenarios. I’ve had theft recoveries that needed no repairs at all, and others that required only a locksmith to program a key.
There are many minor or no damaged cars at salvage auto auctions. Check them out:
Myth 2: I cannot register salvage cars at DMV!
Lies! If you buy a car with a valid salvage title, and I’ll show you how to do it, you’ll have no problems registering it. What’s more, you might even convert the salvage title into a rebuilt or reconstructed title, depending on your state. However, most states require an inspection before issuing a new title, which is quite easy to pass if you’ve purchased cars with little to no damage.
Since I currently live in Florida, I took both of my salvage cars to an inspector, received a rebuilt sticker, and was good to go to register my cars with a rebuilt title.
Myth 3: No one issues insurance for salvage cars!
I’ve been insuring my salvage cars since 2002 when I purchased my first salvage vehicle 1991 Acura Integra with side damage. I’ve lived in multiple states and never had any issues getting coverage. What’s more, I currently insure most of my cars with full coverage, not just limited coverage. As proof, you can see my Aston Martin DB11 with full coverage from Geico insurance. I’ve had pleasant experiences with Progressive, Nationwide, Liberty, and State Farm. Most of the time, I get my coverage online, and nobody calls to verify anything.
Myth 4: You cannot finance salvage cars!
CARS4.BID has partnered with Lightstream to provide loans for all your car needs. The only prerequisite is that you should have a credit score of over 650 and be able to make monthly payments. In the Autohacker’s group, Phil confirmed that he’s used Lightstream and had a great overall experience. “They put money directly into your account, which could be used for salvage or rebuilt cars.” David also suggested trying Western Funding and Westlake Financial; they also provide loans for salvage cars.
Myth 5: Selling salvage car is difficult!
Another LIE! In fact, salvage cars are among the easiest to sell. Let me tell you why. When most of us shop for a car, we typically look at specific year, make, and model, but we also shop by price. If you’re selling a regular used car, you’re competing on price with used car dealers that offer in-house financing, additional benefits, and some even include maintenance. Can you beat that? I doubt it.
However, salvage cars regularly sell for a 25-30% discount, which means you have little competition, and buyers love a discount. If you provide pictures of the car at the auction with no damage, selling becomes a breeze. I discovered this through experience. As a successful Lifestyle Car Flipper specializing in salvage cars, I noticed a significant drop in sales when I obtained my car dealer license and started buying regular cars. I found myself competing with major dealerships and big players in the market. Since I wasn’t fond of this business model, I returned to salvage cars. Later, I began offering broker services to assist other buyers in acquiring cars at substantial discounts. I absolutely loved it.
I was paid $100 per month to drive Dodge Charger
To prove my point, let me show you the Dodge Charger that I mentioned earlier. I purchased the car for $20,000 and invested in new tires, a windshield, maintenance, and a new battery. After registering and paying taxes on it, I drove the car for 3.5 years before selling it for $29,500. Over those years, I made a profit of $4,000. Essentially, I was paid around $100 per month to drive the thrilling Dodge Charger SRT with a 6.4-liter engine. Wow! Can your used car do the same math?! LOL.
That’s not the only car from which I’ve made a profit. I’ve had multiple Dodges with minor damages. Actually, it’s a very popular car among thieves in the USA. My other Dodge Charger was even better. I bought it in 2020, drove it for a year, and was able to sell it for a $10,000 profit. Shh, don’t tell anyone. LOL. This is better than trading stocks. LOL.
Overview
As shown, there are many myths about salvage cars, most of which are unfounded. I’ve been dealing with salvage cars for most of my career, and they are some of the best cars to buy. You can buy salvage cars with minor or no damage. Registering them at your local DMV is usually straightforward. Additionally, you can insure them with full coverage and even secure financing. Furthermore, salvage cars are the easiest to sell, as you compete on price alone.
Additionally, buying salvage cars offers the opportunity to acquire high-quality vehicles at significantly reduced prices, making them an attractive option for savvy buyers. It’s essential, however, to do your due diligence and thoroughly research any salvage car before making a purchase to ensure it meets your standards and requirements.
You can also watch my video about debunking salvage car myths:
Autohacker’s Community
The best way to master it and avoid mistakes at salvage auto auctions is by joining my free Autohacker’s facebook community. You gain access to the best supportive community out there with 1000+ members and you get my free mini-course that can make you a PRO salvage buyer within one hour.
