Wednesday, August 29, 2018

Is a Rebuilt Salvage Vehicle Worth the Savings?



You are browsing your favorite online reseller, when you stumble upon a later model car. It looks beautiful and the price seems too good to be true. Buried in the description, you see the words “rebuilt salvage” or “rebuilt title”. But the car looks great. Should you buy it? Is a rebuilt salvage vehicle worth the savings?

Rebuilt Salvage Vehicles Sell for Less

For some people, the idea of saving thousands of dollars by purchasing a rebuilt salvage vehicle is appealing. Maybe they cannot qualify for a car loan, or are looking for a vehicle they can buy with cash. The low price tag on a rebuilt salvage could give them access to a car when they otherwise would be walking or relying on public transportation.

How a Vehicle Becomes a Salvage

But that reduced price tag is there for a reason. Rebuilt salvage vehicles get that designation because they were:

  • In a severe accident
  • Flooded
  • Stolen and recovered after a major component was damaged or stripped

In Michigan, if a vehicle is damaged in a collision, it must be designated a “salvage” if the cost to repair it is between 75% and 90% of its value before the crash. (Anything above 90% is considered unsalvageable.) When an auto insurance company labels a vehicle totaled or salvageable, it will offer a settlement (usually less than the damaged vehicle is worth) and buy the vehicle from the owner.Under Michigan law, an insurance company who obtains title to a vehicle because it paid a total loss claim must obtain either a salvage or scrap title, regardless of the cost of repair. The only exception is a vehicle that is stolen and recovered with no major components damaged or missing. Unfortunately, most insurance companies will manipulate the estimated cost of repair and the pre-crash value of the vehicle to keep the ratio below the 75% salvage threshold.

Then, the salvaging starts. The insurance company will sell the vehicle at auction to a person with the ability to rebuild it. When that happens, the vehicle should be issued a new orange title branded “Salvage”. These vehicles cannot be registered with the state or driven on public roads.

What It Takes to Get a Rebuilt Title

Before the new buyer can turn around and sell the vehicle, he or she must rebuild it. But that doesn’t mean it must be restored to good condition. Once the vehicle is rebuilt, it must be inspected by the Michigan State Police. However, that inspection may only include determining whether:

  • The car is complete (for the most part)
  • None of the traceable pieces are stolen

The inspector who certifies the vehicle does not even drive it. The car is only turned on to make sure the exhaust isn’t too loud. As long as the car has all its pieces and isn’t stolen, the inspector will certify it as a rebuilt salvage vehicle, which can be registered and driven legally, even if it isn't safe to drive. 

How to Know if a Rebuilt Salvage Vehicle is Safe to Drive

Since the MSP Inspector isn’t looking at safety, you should have any rebuilt salvage vehicle thoroughly inspected by your own mechanic before you buy. You want everything checked out, because you won’t necessarily know what damage was done by the flood waters or the accident. You should also order a vehicle history report. This should show any accidents or thefts involving the vehicle, so your inspector will know what to look for. Because rebuilders often take "shortcuts," you should have your inspector pay particularly close attention to safety equipment. Common problems include:
  • Fake or non-working airbags
  • Seatbelts that were not replaced after the collision
  • Bent frames
  • Missing suspension components.

Even if your rebuilt wreck does pass inspection, you should still be prepared for the unexpected while you own the vehicle. Parts may fail, or you may have problems related to the damage done before you bought the car. You may find yourself dealing with electrical problems for a flood car, or that your tires wear out sooner if your car’s frame is bent.

Buying a rebuilt salvage vehicle can sometimes be worth the savings. It can provide low-income families with a drivable vehicle when they wouldn’t otherwise qualify for a loan or have the cash to buy used. But you need to know what you are getting going in. And you need to be prepared to spend more in repairs and maintenance than you would with a traditional used car. Knowing what to expect can be the difference between a smart investment and wreck by the side of the road.

Dani K. Liblang is a lemon law lawyer at The Liblang Law Firm, PC, in Birmingham, Michigan. She helps the victims of auto fraud and people who unknowingly purchase rebuilt salvage vehicles. If your used car has turned out to be a rebuilt wreck, contact The Liblang Law Firm today for a free consultation.

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