Salvage-Title Vehicle Finance – How to Improve Your Chances

The reason why there are always some people who are interested in buying salvage-title cars is because they can get some really good deals. Compared to used cars of the same vintage, salvage cars can usually be purchased at a discount of up to 40%, and we are talking about rebuilt and roadworthy cars. However, you not only have to be pretty savvy about buying totaled cars but also deal with the increased difficulty in obtaining institutional finance and insurance. Because of the high-risk category of vehicles written-off by the insurance companies, it can be a pretty challenging task to find finance and insurance, and this can often be a deal-breaker.

Salvaged Vehicles – What Are They?

Any vehicle on which, the insurance company pays out the full amount for which, it is insured rather than entertain a claim for repairs is technically a salvaged vehicle. Usually, these are cars that have suffered damage to such an extent that it is not worthwhile for the insurance company to pay for the repairs. For new and high-value cars, obviously, the nature and extent of damage have to be pretty severe for the car to be written off, or totaled, as the industry parlance goes. However, in the case of old cars that have already seen a lot of depreciation, even a minor accident that may just be nothing more than a fender-bender can be sufficient for the insurance company agreeing to write it off. See a good selection of salvage-title vehicles at

Other instances where cars are written off are where the vehicle suffers flood damage, and where the vehicle may have been stolen and not recovered in the stipulated two to three weeks time, after which, the insurance company has to pay out the claim. If the vehicle is recovered later, the title goes to the insurance company. There are a number of states that mandate that cars will need to be written off by the insurers if the cost of repair is estimated to be more than 75% of its worth. The reason why savvy buyers chase salvage-title vehicles is because they can hope to buy cars that have had very slight damage, yet been totaled by the insurance company. Older cars with minor damage, stolen cars recovered or even cars hit by flood waters but with no damage to the electrical system are hot favorites.

Why Is It Normally Difficult To Get Finance for Salvage Vehicles?

When a finance company extends a loan to you they are secure in the knowledge that they are safe even if you default as their loan is covered by the value of the car that they can repossess and sell off. In the case of salvaged cars, the vehicles have already been written-off by the insurance companies once, and even if they have been rebuilt, their values are substantially depressed. Due to their nature, there is no market for second sales of salvaged cars.

In case, the owner of a salvage-title car defaults, there is very little to be gained by selling it off. Also, finance companies can never be too sure if all the defects due to which the car had been written off have been rectified. In this scenario, they cannot remain confident that the car is mechanically sound and that the owner will not walk away if it breaks down completely leaving the finance company to face the music. Among the biggest hurdles in getting a salvage car financed is the difficulty in obtaining insurance cover for it, as insurers are extremely reluctant to extend cover for vehicles that have been written off once.

Well Then, How Do You Improve Your Chances of Obtaining Finance?

The first thing is to ensure that the car you intend to buy is completely safe and roadworthy. You should have the car thoroughly checked by a competent and certified mechanic – the certificate will be required to be produced to both the financier and the insurance company. If you buy the car from a licensed outlet it adds to your credibility. Make it a point to ask for all the original documents of the car and the repairs so that the lenders can satisfy themselves of the antecedents of the car.

To increase your chances of getting finance, you should preferably have a good credit score, and have enough proof of your responsible status in the society. The vehicle’s documentation should be correct and clear, and you should ideally have additional assets that could be mortgaged to the lender if so required. Getting an approval from an insurance company could be crucial to getting finance. You increase your chances of getting finance by approaching those institutions with who you already have a good relationship with. Try and talk with brokers or agents who specialize in getting finance for high-risk vehicles.