Financing For Salvage Title Vehicles

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You may be wondering what’s the best way to pay for a salvage title vehicle at auction time. Can you get financing for a vehicle with a salvage title? Will banks make loans on salvage-title cars?

The answer, unfortunately, is that few banks will provide a loan on a car with a salvaged title. They look at a salvage-title car as a poor risk, and would rather protect their own interests in such a case. Even a car that only has cosmetic damage or interior damage from water is still considered a bad bet by a bank the salvage title itself is going to be a fairly huge red flag. It’s similar to the reason why a bank will require full-coverage insurance on a late-model car that they’ve financed, until it’s paid off. Again, that’s a matter of the bank protecting its own interest. There’s a chance that your local credit union (if you’re a member) might make a loan on a salvage-title car, a chance that’s at least worth checking into.

The good news, however, is that any salvage-title car is ...
... likely to be considerably cheaper at resale than its counterpart that doesn’t have a salvage title. And the older the model year, the more this will apply. Body work, interior work or paint are all very expensive, and for a car or truck that’s more than five or six years old, it won’t take very much damage at all for an insurance company to write off the vehicle as a total loss and give it a salvage title. So it’s not as if the insurance company suffers too badly when financing for salvage title vehicles. When you consider that some fairly big money can be taken right off the front end for a vehicle with a salvage title, it makes it a little easier to think about the kind of money that will need to be put into it to make it drivable or to fix any cosmetic problems. More often than not, you’ll still come out ahead compared to what you’d spend for a late-model, low-miles vehicle with a clean title.

The bottom line is, if you’re hoping to finance a salvage-title vehicle, your chances of seeing that happen are probably fairly slim. Few, if any banks will make a loan in such cases. It’s probably not a reasonable thing to expect, to be quite honest. You’re a lot better off being able to offer cash in such a case. If that’s a problem, you might want to look into liquidating another vehicle and turning it into the cash you need to come up with a good bid on a salvage title car. It’d also be worthwhile to regularly scan auction results for salvage title cars (not only on Copart, but Auto Bid Master and other auction sites) to see what prices a salvage-title car with your specs (year, model, features, mileage, etc) can commonly bring.